Amazon (NASDAQ:AMZN) stock has had a remarkable resurgence in recent months, offering a glimmer of hope amid broader market uncertainties. While much of the tech sector has faced challenges, Amazon’s forward looking strategies and focus on profitable growth are key pillars for its future.
The generative AI market is a positive tail wind for growth in 2024. Demand for AWS cloud infrastructure has remained extremely strong. The company’s cost-cutting measures in 2023 are strengthening its appeal in a competitive market. With AWS AI capabilities growing, investors should consider potential share price increases.
generative AI as a Growth Engine
The explosion of generative AI applications and LLMs like ChatGPT represent a significant tail wind for Amazon. Amazon stock has heavily invested in AI research and development for years, making this domain a natural strength.
In several critical areas, AI has the potential to streamline Amazon’s operations and create new revenue streams. This includes AI chatbots, AI enhanced product recommendations, hardware robots, and optimized inventory management.
What sets Amazon stock apart from its competition is its robust generative AI platform, Amazon Bedrock. It is one of the world’s most advanced generative AI platforms that allows AWS customers to run, train, and deploy generative AI applications.
That is just one piece of the puzzle to their advanced suite of generative AI products and services. They also have their customer EC2 deep learning chip for AI inference.
It is equipped with over 100B+ parameters and uniquely designed to process the most advanced and demanding AI workloads. Their unwavering focus on AI will continue to drive growth at AWS, making the stock extremely appealing in 2024.
AWS Demand Remains Robust
Amazon Web Services is the backbone of Amazon’s profitability and a key growth driver. Demand for cloud computing solutions remains strong as businesses of all sizes migrate their infrastructure to cloud-based services.
Amazon stock maintains dominance in the cloud infrastructure market, holding nearly ⅓ market share. AWS contributes heavily to Amazon’s operating profit, which saw unprecedented growth in their latest quarterly results.
In Q1 FY24, Amazon’s operating income more than tripled to $15.3 billion, compared to $4.8 billion in 2023. AWS AI capabilities are accelerating the company’s growth, and it is now at a $100 billion annual run rate in 2024.
AWS plans to launch two new infrastructure regions in Saudi Arabia and Mexico with investment totaling more than $10 billion. They aren’t slowing down there too, with an additional $10 billion investment to build two new data centers in Mississippi. As generative AI continues to permeate industries, Amazon’s cloud infrastructure will be at the forefront of this new technological renaissance.
Amazon Stock: generative AI Will Be a Key Growth Driver in 2024
Amazon stock is on a roll to start off 2024, and generative AI will continue to be a primary growth driver. Demand for AWS cloud infrastructure remains strong, as AWS customers look to enhance their AI capabilities.
More importantly, Amazon’s key financial metrics are all trending in the right direction. With their cloud business at a $100 billion annual run rate, now is the time to strategically position your portfolio for outperformance in 2024.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
