Amazon's E-commerce Business Still 'Underappreciated' on Wall Street

According to Wedbush analyst Scott Devitt, Amazon.com Inc., the leading online shopping platform, is not receiving enough recognition for its core e-commerce business on Wall Street. Devitt, along with two other analysts from Wedbush, recently initiated coverage of internet names, giving Amazon an outperform rating and featuring it on Wedbush's best-ideas list.

Although Amazon's e-commerce business has faced challenging year-over-year comparisons due to the pandemic and has encountered operational obstacles in its fulfillment operations, the tide appears to be turning. With comparisons becoming more favorable and an increasing utilization of its fulfillment infrastructure, Amazon is now in a strong position. In fact, their industry-leading infrastructure allows them to deliver four times as many same-day or next-day orders in the U.S. compared to 2019.

Devitt believes that Amazon not only benefits from a improving e-commerce landscape but also has other compelling aspects to its business. For instance, the company's AWS cloud-computing business is stabilizing as customers adjust their spending to manage expenses.

Overall, despite some challenges faced by Amazon, their core e-commerce business is poised for success. With their impressive fulfillment infrastructure and various other favorable factors, Amazon continues to lead the way in the online shopping industry.

Amazon's AWS Growth Stabilizing and Optimized for Costs

In the recent months, recession fears in the U.S. have been fading and interest rate increases are moderating. This has led to stabilizing growth for Amazon Web Services (AWS), according to industry expert Devitt. He highlights that AWS's customer base is now mostly optimized for costs, positioning the company favorably in the competitive landscape.

Looking forward, Devitt expects sustainable double-digit growth for AWS in the intermediate term. As more workloads shift to the cloud and the demand for generative artificial intelligence (AI) increases, there will be incremental spending that further drives AWS growth.

Amazon's Advertising Business as Clear Leader in Retail

Devitt also shares positive insights on Amazon's advertising business, which he describes as the clear leader among retail media networks. With access to a wealth of transaction data and a massive scale of site traffic, Amazon is well-positioned to expand its advertising business more quickly than its gross merchandise volume going forward.

Excitement Surrounding Amazon's Grocery Initiatives

Intriguingly, Devitt is also intrigued by Amazon's grocery initiatives. The company recently announced plans to merge grocery offerings into a single cart, signaling a strategic move towards enhancing the grocery category growth. With the ongoing expansion of Amazon's fulfillment capabilities and improving delivery speeds, an increasing percentage of American consumers can now enjoy same-day or next-day delivery for a variety of grocery and everyday essentials.

Overall, with stabilized AWS growth, a leading position in the advertising business, and promising developments in the grocery sector, Amazon continues to demonstrate its innovation and potential for future expansion.