Amazon Stock Lags S&P 500, Plans $100B AI Investment
Amazon (AMZN) has seen a modest increase of less than 4% this year, while the S&P 500 has surged by 14%. The e-commerce giant's operating income guidance for the current quarter stands at $15.5 billion to $20.5 billion. Despite a short-term downtrend, Amazon's growth rate over the past three years has averaged around 11%.
Amazon is planning to invest up to $100 billion in AI this year, indicating a strong commitment to technological advancement. However, some investors may be cautious due to the stock trading below its 50-day moving average and the perception of high overall stock prices amid market volatility. Amazon's top line grew by 13% to $167.7 billion in its most recent quarter, but investors might be concerned about the returns on AI investments.
Amazon's price-to-earnings multiple currently stands at 35, significantly lower than its historical average. The company has practical use cases for AI and is expected to benefit from it in the long run. Nevertheless, other tech companies are growing at faster rates, and there are more AI stocks available for investment, making Amazon potentially less attractive to some technical investors.
Amazon's growth rate and AI investments are drawing attention, but short-term market conditions and investor sentiment may impact its attractiveness. With a lower price-to-earnings multiple and practical AI applications, Amazon's long-term prospects remain promising, despite recent market dynamics.
