- Amazon’s increasing automation is expected to significantly boost margins over the next 5-10 years, potentially reaching a 9% net margin by 2029.
- Long-term stock price target of $500+ by 2029 indicates a 23% CAGR, driven by efficiency gains from AI and robotics.
- Risks include regulatory challenges, macroeconomic impacts, and potential deflationary pressures from widespread automation adoption.
I last covered Amazon (NASDAQ:AMZN) in May; I put out a Buy rating at the time, and since then, the stock has lost -0.85% in price. Since my first analysis of Amazon in January, the stock has gained 23.35% in price. All of my ratings for Amazon are long-term oriented, as I believe it is the right company to buy and hold rather than to trade on for valuation or growth momentum. That being said, I do think that the present valuation is currently vulnerable to contraction if the markets turn more bearish surrounding AI capabilities in the next 9 to 18 months. The technology sector at large is exposed to such risk, and I think what Amazon has that strengthens it is diversification in retail operations and entertainment, which acts as some security if AI sentiment shifts downward periodically for the worse.
In my opinion, over the long-term, Amazon is positioned to radically increase its margins through higher automation capabilities, which I believe have the likelihood of beginning to play out significantly over the next 5 years. In July 2029, it is conceivable that Amazon will have a stock price of over $500 as a bull-case outcome, indicating a 5Y price CAGR of 23% from the present stock price of $183.
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