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Why Is Amazon Stock So Cheap?

Here’s what we see.

Andrew Willis Jan 13, 2023

Why Is Amazon Stock So Cheap?

Andrew Willis: It’s understandable that retail investors might relate a drop in packages on doorsteps postpandemic to a poor outlook for Amazon AMZN. COVID pulled forward a lot of consumer demand but did so by changing consumer behavior and solidifying the presence of e-commerce in categories like groceries, pharmacy, and luxury goods.

And retail isn’t necessarily the area of Amazon where we see the most growth going forward. While building out its retail network, the company established strong advertising channels and a solid presence in the cloud with AWS.

Senior equity analyst Dan Romanoff sees retail-related revenue growth of around 7% compounded annually for the next five years. But on advertising, he projects 20%, and on AWS, 22% going forward. So, you really can relate the word “Amazon” with ecosystems.

For Morningstar, I’m Andrew Willis.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Andrew Willis

Senior Editor

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Andrew Willis is senior editor for Morningstar Canada, covering stocks, alternative assets, funds, and personal finance. He is the writer and host of two weekly stock features, including Morningstar's Stock of the Week.

Willis previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor. He has also written for Thomson Reuters and CNN.

Willis holds a bachelor's degree in business administration from Bishop's University and a master's degree in journalism from the University of Hong Kong. Follow him on Twitter @Andrew_M_Willis.

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