How they can increase profits

Most of the market is focused on now Technology field And the ability to deliver on its promises artificial intelligence. However, there are many other innovations that should make it to the podium in the coming months. The idea of ​​drone delivery for package services was introduced a long time ago, and has never been noticed until today.

In Arizona, a company has achieved what was thought to be years later. Amazon.com Inc. NASDAQ: AMZN To begin with, rules and safety have been cleared Same day drone delivery offer. One thing investors need to keep in mind is that Arizona is now the test case for success and safety. If drone delivery goes well there, it could soon spread across the United States.

That means a few things for Amazon stock, of course a key driver of increasing market share and efficiency. But what does it really mean? That means better margins and for its cloud computing arm, Amazon Web Services (AWS), to expand its footprint, as drones need to be operated safely. The end result would be more profitable, making the stock look cheap today despite the high price-to-earnings (P/E) ratio.

Amazon stock is “expensive” for a reason

When investors value an asset, they often refer to valuation metrics such as the P/E ratio and others. However, the market is not an equilibrium game governed by ratios and equations; There is also a lot of psychology involved. So here it is necessary to understand the concept of expensive.

Certainly, Amazon stock trades at a significant premium to the rest Retail areatogether with Average rating of 5.5x price-to-book (P/B). With an 11.4x multiple, Amazon shouldn’t be considered by any value investor because it’s expensive, but it’s expensive compared to what?

There are no other options like Amazon; Only one that comes close Alibaba Group NYSE: BABA in China, but investors are still not very comfortable with foreign investments, so that leaves only Amazon. Knowing this, it makes sense that the only player in town would command a premium over its industry, but there’s more to it.

Acknowledging that Amazon has tapped into the fast-growing world of artificial intelligence and that its data center expansion will monetize new oil (data), investors can see a future where Amazon’s earnings per share (EPS) is ten creates the multiples that they are today.

Then again, the stock doesn’t look as expensive now as it might five or ten years from now, does it? But, without getting too far ahead, this is what analysts think about the stock with the next 12 months in mind.

Wall Street’s View on Amazon Stock: Can Drone Delivery Take It Higher?

Today’s view doesn’t yet reflect the potential impact that these drone deliveries and the data center support they require could have on Amazon’s business as a whole. Nevertheless, the views of Wall Street analysts today serve as a foundation from which investors can build their assumptions and projections for the future.

Starting with their hold rating on Loop Capital through November 2024, they were ready to break away from the pack and its consensus target of $236.2 per share, as these analysts pegged the stock at near-term highs. They see it coming. $275 per shareThat’s why they reiterated their “buy” rating on the stock as well.

To justify these goals, Amazon would have to rally more than 25% from where it trades today, not an easy task to pull off as a $2.3 trillion company, but still realistic when investors all Keep in mind the growth drivers are working in the stock’s favor today.

Perhaps the drone delivery isn’t directly related to the announcements, but it wouldn’t be too far-fetched to imagine; Three major institutional investors came to buy Amazon stock in early November 2024.

The leaders were Geode Capital Management, which increased its holdings by 3.4%, followed by Franklin Resources by 0.5% and finally Toronto Dominion Bank by 6.1%. While percentage growth serves as a gauge, the net volume of investment can give investors a better view of these trends.

Geode holds so far Amazon is worth $37.1 billionFranklin and Toronto Dominion have $8.8 billion and $932.6 million. These top positions, reported just weeks after a new drone delivery announcement, may be an indication of what to expect from Amazon in the future.

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