Where will Amazon stocks be in 3 years?

With its shares up 23% year to date, Amazon (NASDAQ:AMZN) finally rebounded from the post-pandemic crisis. The recovery was based on streamlining its e-commerce business and pivoting towards exciting new growth drivers like artificial intelligence (AI).

Let’s explore how this dynamic can continue to unfold over the next three years.

A lighter, meaner Amazon

While layoffs and cost cutting may create a sense of dread among middle managers and other replaceable employees, but they can be great news for investors who want a more streamlined and profitable business. For Amazon, these controversial efforts are paying off.

The company’s first-quarter revenue rose a modest 13% year-over-year to $143.3 billion, but operating profit jumped more than 200% to $15.3 billion. dollars. Many of these improvements are due to improved efficiencies in North American and international e-commerce, which previously suffered from low margins due to pandemic-era overexpansion under former Amazon CEO Jeff Bezos.

New CEO Andy Jassy is slashing costs. Nor is he only looking for short-term profits.

And Jassy is refocusing the company on what has historically made it successful: the customer experience. In the first quarter, Amazon achieved its fastest delivery speeds on record, with nearly 60% of Prime members’ orders arriving within two days in the nation’s 60 largest metro areas.

And in major international cities, including London, Tokyo and Toronto, three out of four items arrived within two days.

Investors should not expect massive e-commerce activity to become a big an engine of growth for the next three years. But THE The company can leverage its size and operational efficiency to maintain its dominant position, ensuring customer satisfaction while delivering reliable profits to investors.

Medium-term growth drivers

Over the next three years, the company’s prospects will depend on its ability to monetize generative artificial intelligence (AI). It has developed a business model in spades that provides the computing power and core models to its Amazon Web Services (AWS) customers to build consumer-facing applications.

AWS first-quarter sales jumped 17% year-over-year to $25 billion. And the cloud computing segment continues to contribute a considerable portion of Amazon’s operating profit, with $9.4 billion of the $15.3 billion (63%) generated during the period.

New AI-related services like Amazon Bedrock, which allows AWS customers to build consumer-facing AI applications using the foundational models provided, will help fuel continued growth.

The story continues

The company is also integrating AI into other aspects of its business, including customer service; generation of images for advertisements; and virtual assistant Alexa, which it plans to update with AI features and re-release this year for a monthly subscription fee. None of these efforts will make a big impact alone, but they could create a flywheel…