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3 Amazon Stock Predictions for 2025

3 Amazon Stock Predictions for 2025

Not even Nostradamus could have predicted the events of 2024. Let’s see if this year will be easier.

At the start of 2024, I made three predictions for Amazon (AMZN 0.73%) stock investors. Let’s see how I did it:

  • I predicted that Amazon’s cloud growth would accelerate again. In the three quarters reported so far in 2024, Amazon Web Services (AWS) revenue has grown 18% year-over-year, including 19% growth in the third quarter. That’s up from the 13% growth seen in 2023, so I’ll put that in the win column.
  • My call is Amazon’s artificial intelligence (AI) would be a sleeping giant also seems to be playing out, although it’s not as quantifiable. However, AI Magazine named Amazon SageMaker “one of the best AI tools of 2024,” beating out Amazon SageMaker. Microsoft Azure AI and Alphabetis Google Cloud AI, so I’ll take that as well.
  • I also rightly announced that Amazon would join Microsoft and Apple in the $2 trillion club. However, I only get partial credit because while Amazon’s market cap is indeed over $2 trillion, Apple, Microsoft and Nvidia are all valued at over $3 trillion as of this writing.

My three predictions turned out to be perfect, even if each one seems in retrospect like child’s play. Let’s see if I can maintain my streak of Magic 8 Ball type predictions for 2025.

A track labeled 2025 and successive years with a sunrise on the horizon.

Image source: Getty Images.

1. Amazon will maintain its lead in the cloud

While some might think this goes without saying, the field of cloud infrastructure services has become remarkably competitive over the past few years. Google Cloud and Microsoft Azure are battling for the title of “fastest growing” cloud service. Google Cloud came out on top with 36% year-over-year growth in the third quarter, edging out Microsoft with 33% and AWS trailing behind with 19%.

CEO Andy Jassy said: “We have seen a significant re-acceleration of AWS growth over the last four quarters,” putting its annualized revenue execution rate at 110 billion dollars. Thus, AWS controls approximately 33% of the cloud infrastructure services market, more than Azure and Google Cloud. combinedaccording to the research firm Canalys.

I predict that AWS’s growth will continue to accelerate, helping Amazon retain the cloud title throughout 2025, even in the face of increasing competition.

2. Amazon will steal the show from Microsoft

Microsoft gets at least partial credit for sparking the AI ​​revolution. The company’s investment in parent company ChatGPT OpenAI and the subsequent integration of generative AI tools into his vast empire helped jump-start AI adoption, and Mr. Softy has reaped the rewards.

For example, during the company’s first quarter of fiscal 2025 (ended September 30), Microsoft reported that its Azure cloud growth included “12 AI service points, same as last quarter.” This has been a recurring theme for the company over the past few quarters. Indeed, Microsoft is “leading the global AI and generative AI race,” according to data compiled by IoT Analytics.

That said, competition is intensifying and Amazon is coming out strong. Jassy recently said: “Over the past 18 months, AWS has released nearly twice as many machine learning And Generative AI features than other major cloud providers combined” (emphasis mine).

I predict that over the next year, Amazon’s growing list of AI-related features will reassert its dominance, making it the leader in AI.

3. Amazon’s flagship e-commerce business will become stable more profitable

One of Jassy’s biggest initiatives during his tenure as CEO was to increase Amazon’s profitability by reducing costs and realigning its logistics and distribution centers. The company focused on “bringing more items closer to end customers.” This saves on shipping costs, making Amazon more profitable.

The company is also moving toward automation, with “our newest robotics inventions to simplify the stowage, picking, packing and shipping processes. » Jassy notes that these advancements reduce order processing time by 25%, resulting in a 25% improvement in costs during peak periods.

These efforts have been at the forefront of Amazon’s North American segment, by far its largest. While e-commerce sales grew 10% year-over-year in the first nine months of 2024, operating profit increased 87%. This helps illustrate Amazon’s success in cutting costs, thereby further reducing profits from the bottom line.

I predict that Amazon will continue to implement these revolutionary cost-cutting measures, further expanding its bottom line.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Danny Vena holds positions at Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool holds positions and recommends Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.