Why Amazon Is a Prime Investment
We expect it to continue to dominate its served markets.
We think Amazon (AMZN) is a compelling investment opportunity as the market continues to underestimate the secular shift toward e-commerce, the long-term opportunity for public cloud, and the growing importance of advertising within Amazon’s online presence. The company’s wide economic moat is driven by powerful network effects, cost advantages, high customer switching costs, and intangible assets, which we do not see being threatened. Amazon has been an obvious beneficiary of the pandemic-related lockdowns, and we believe that e-commerce trends have been pulled forward a couple of years. As the only true demand aggregator in the United States, this has strengthened the company in the near term, in our opinion, and leaves it in a better competitive position for the next five years.
We think online grocery shopping is here to stay, with the pandemic offering a proof of concept for many consumers who might not have been inclined to try it. While investors might have questioned the build-out of a captive transportation network two years ago, it proved to be a critical decision for the company and consumers and was the only real alternative for third-party sellers during the pandemic. We believe e-commerce will continue to take share from traditional retailers and forecast that Amazon will expand its e-commerce market share from 42% today to beyond 50% in 2025.
Dan Romanoff does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.