Amazon (NASDAQ: AMZN) shares have been on hearth currently. Actually, they’ve risen 120% since early 2023 and are actually sitting slightly below a 52-week excessive of $187.

To the detriment of my wealth, I’ve by no means owned Amazon inventory, regardless of its apparent qualities.

So, is now the time for me to rectify this oversight? Let’s talk about.

Transition

Day 2 is stasis. Adopted by irrelevance. Adopted by excruciating, painful decline. Adopted by dying. And that’s the reason it’s all the time Day 1 [at Amazon].

Jeff Bezos, 2016 letter to Amazon shareholders

CEO Andy Jassy took over from Jeff Bezos in 2021. Practically three years later, some critics argue that Amazon now focuses extra on driving near-term effectivity than radical innovation for the longer term.

There’s a diploma of reality in that, I’d say, because it has been a few years since we’ve seen a brand new Amazon enterprise launched and scaled as efficiently as Amazon Internet Providers (AWS) or Prime.

Voice assistant Alexa hasn’t turn out to be the game-changer many anticipated, myself included. I initially noticed it as a strong AI concierge with limitless use circumstances and revenue technology potential. A chatbot on steroids, mainly, that will problem Google’s search empire.

Nonetheless, most individuals I do know nonetheless primarily use Alexa to play songs on their Echo units!

Plus, AWS is now rising extra slowly than rivals Google Cloud and Microsoft Azure. 

Subsequently, it’s not a slam-dunk certainty that Amazon will stay a dominant power indefinitely.

India alternative

Having mentioned all that, it’s exhausting to not see Amazon rising ever bigger. Take India, for instance, the place it has a big operation.

In line with Statista, the Indian e-commerce market has grown from $39bn in 2017 to $74bn by 2022.

But this accounted for lower than 10% of the entire retail market in India. And e-commerce is ready to turn out to be a $350bn market by 2030!

Subsequently, assuming no regulatory intervention, Amazon appears very prone to develop its complete 100m+ consumer base there for a few years, probably many years.

Valuation

Amazon inventory usually seems dear based mostly on the price-to-earnings (P/E) metric. Proper now, the P/E is 63.

Nonetheless, many progress traders desire to take a look at Amazon’s price-to-operating money move (P/OCF) ratio.

As may be evident, this considers the amount of money generated from the operations of the underlying enterprise. At the moment, that is 23 versus a 13-year median of 27.44.

Primarily based on this, the inventory isn’t overvalued. And analysts see the corporate’s working money move rising 49% to $127bn this yr. Then to $166bn in 2026.

Oh, and based mostly on consensus estimates, annual income may high $1trn by 2030!

It won’t be Day 1 at Amazon anymore, however we’re definitely nowhere close to Day 2.

Diversification

One concern I’ve been wrestling with currently is duplication of tech shares in my portfolio.

I’ve a big holding in Scottish Mortgage Funding Belief, which itself has giant positions in Amazon, Nvidia, Tesla, and Meta.

In the meantime, I’m invested in Pershing Sq., which holds Alphabet. I additionally personal Alphabet shares.

So I’m cautious about rising my publicity to mega-cap tech shares by additionally investing in Amazon.

After all, that is solely related to my very own portfolio. If I didn’t have this concern, I’d contemplate investing in Amazon shares, regardless of them flirting with a contemporary all-time excessive.