One of the world-class e-commerce companies most investors wouldn’t dare bet against is Amazon (AMZN). This stock has been a relative disappointment this year, currently trending down, as the broader stock market continues to digest certain headwinds.
Rising interest rates, for one, have diminished the potential of high-growth tech stocks. Amazon’s valuation, relative to its peers, also appears to be a factor investors are pricing in right now. As investors de-risk their portfolios, even the highest-grade growth stocks are under pressure.
That said, Amazon remains a world-class growth stock I’m bullish on over the long term. Here’s why I think that now may be a great time for long-term investors to go ahead and buy the most recent dip on AMZN stock.
What Is JPMorgan Saying?
At TipRanks, we pay special attention to what the analysts think of specific stocks. In the case of Amazon, as you’ll see below, this stock is one with 32/32 analysts suggesting this e-commerce giant is a Strong Buy. That’s hard to find in the market.
For JPMorgan analysts, Amazon has been listed as an Overweight stock, with a $4,100 price target for 2022. That price target represents 31% upside potential from current levels at the time of writing.
Why is this bank so optimistic?
Well, JPMorgan believes that the disruption caused by the COVID-19 outbreak has hurt the retail sector overall. Supply chain issues have impacted companies from physical retail to e-commerce. As the largest player in the e-commerce space, Amazon has gotten caught up in these issues.
Accordingly, JPMorgan analysts believe that these supply chain disruptions should be sorted out soon. When supply chains return to normal, expectations are that the secular trends favoring e-commerce will continue, driving further growth for Amazon relative to the competition.
Amazon’s status as a leading e-commerce company globally has helped AMZN stock soar to new all-time highs this past year. While some investors seem keen to sell pandemic-driven winners, Amazon’s strong secular trends still point in the right direction.
Notably, JPMorgan analysts cited a likely price increase in Amazon Prime in 2022 as a catalyst for this stock. Amazon just raised its Prime pricing, adding more credence to this analyst note.
Why Load Up on AMZN?
There are many reasons long-term investors continue to hold, and add to, their Amazon positions right now.
This e-commerce giant continues to diversify its business and move into unexpected areas to seek growth. The company’s announced move into physical retail is one such example of this. The Wall Street Journal recently reported that this e-commerce giant aims to set up an offline or brick-and-mortar outlet chain.
Amazon is looking to push its products and services into the physical retail space through this initiative. The expected locations will be Ohio and California. These stores are to be about 30,000 feet and will offer Amazon’s e-commerce services.
In addition to the company’s retail business, most investors are aware of Amazon’s impressive (and growing) presence in the cloud computing space. Amazon has become one of the cloud computing giants globally and has parlayed this growth into investments in other core software-related businesses of late.
One such move was the launch of Amazon MemoryDB for Redis. MemoryDB helps users to store complete datasets on the cloud, leveraging Amazon’s existing presence in this space.
MemoryDB will offer high throughput, low latency, and durability at any scale. Hence, there is no requirement to maintain a cache or durable database to create top-performance apps. Many top private players like TransACT (TACT), Cimpress (CMPR), Twilio (TWLO), Netflix (NFLX) have shown interest in MemoryDB.
This development is likely to further boost Amazon’s growing market share in the cloud space. Accordingly, investors bullish on Amazon’s ability to continue to improve its financial profile look to growth projects such as these as potential long-term catalysts.
Wall Street’s Take
Turning to Wall Street, AMZN stock comes in as a Strong Buy. Out of 32 analyst ratings, there are 32 Buy recommendations.
The average AMZN price target is $4,189.67, implying 33.9% upside potential. Analyst price targets range from a high of $5,000 per share to a low of $3,600 per share.
The Bottom Line
Amazon is one of the top e-commerce giants that has found a way to carve out an impressive niche not only in the e-commerce space but in cloud computing and other high-growth businesses.
As these sectors continue to grow, buoyed by strong, long-term secular tailwinds, investors continue to win by betting on the biggest and strongest players in this space.
There’s no reason right now to believe Amazon’s growth trajectory is likely to slow, barring some sort of catastrophic macroeconomic event. Accordingly, I think this is a stock that’s worth buying on this dip, and nearly any dip, right now.
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