Is Amazon's Stock Poised to Rally in 2022？

 

Shares of Amazon.com have lagged the broader market this year. Amazon shares are up only 4.2% in 2021, well behind the S&P 500 index’s 28% rise.

Heading into 2022, however, many analysts are bullish on the stock, even Barron's lists its One of Top Picks.

After a strong stock performance in 2020, Amazon has trailed this year’s healthy market rally. However, we believe the company’s fortunes are poised to change in 2022.

Amazon's stock is going to soar?

In our view, Amazon is uniquely positioned to exit this crisis as one of the biggest beneficiaries of accelerated digital transformation.

Amazon's dominance in two major businesses makes it a rarity. It has a 40% share of the U.S. e-commerce market, and about half of the lucrative cloud-computing sector.

Amazon’s fastest-growing businesses, like AWS and advertising, have high margins. Plus, an estimated 85 million U.S. households are Prime members.

We see 20%-plus annual revenue gains and expanding margins over the next two to three years, it may be the “TAMiest” of the mega-cap internet companies, including APPL, FB, MSFT, GOOG. $Amazon.com(AMZN)$ $Apple(AAPL)$ $Alphabet(GOOG)$ $Meta Platforms, Inc.(FB)$ $Microsoft(MSFT)$

With more than $60 billion in annual sales, AWS could be worth $1 trillion alone. That means about $700 billion for the rest, including the leading online retail business, offline shopping, advertising, media, and logistics.

Amazon stock was among Barron’s top stock picks for 2022. While the stock isn’t cheap, its fast-growing businesses have the high margins to warrant more optimism.

With an analyst price target of $4,500 now at $3,390, there's so much more to go.

Are you willing to bet?