Amazon Stock Forecast (NASDAQ: AMZN): Why You Should Now Go Long On Amazon

Amazon Stock Forecast

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Summary:

  • In spite of Trump’s attack against Amazon, I am endorsing the company as a good long-term investment.
  • Amazon Web Services is the undisputed leader in cloud computing infrastructure services. It has a good chance to win the $10 billion contract from the U.S. Defense Department.
  • The 100 million-strong Amazon Prime subscribers’ army also makes Amazon’s leadership in e-commerce invidious and indomitable.
  • Amazon doesn’t need Flipkart. It already has a strong presence in India. The new international shopping feature of the Amazon mobile app is also a global tailwind for Amazon.
  • AMZN has bullish 90-day and one-year algorithmic market trend forecast from I Know First.

Ignore the venom being hurled by Trump against Amazon (AMZN). Patrick Donahoe, the former chief of the U.S. Postal Service already said that delivering Amazon packages is a profitable contract. Trump’s attack (against Amazon) is also unlikely to affect Amazon’s chances to win the $10 billion contract from the United States Department of Defense.

Amazon Web Services [AWS] is the undisputed global leader in cloud computing infrastructure services. In spite of the best efforts of Microsoft (MSFT) Azure and Google (GOOG) Cloud, AWS still holds a commanding 35%++ market share of the global cloud computing infrastructure industry.

The military/political leaders of the United States are smart enough to admit that AWS’ leadership is due to it having the most affordable but still secure cloud computing infrastructure. Politicians and military officials are subject to the whims of the American voting public. If Amazon loses the $10 billion contract, a single voter (who has AMZN shares) can write a U.S. congressman and/or senator and we could have a congressional investigation if ever Amazon does not win the contract.

Going forward, Amazon winning the 10-year, $10 billion contract from the U.S. Department of Defense will add $1 billion annually to the already substantial revenue of AWS. Amazon’s attractiveness as a long-term investment is largely due to its fast-growing AWS business segment. AWS earned $17.5 billion in revenue last year. This is notably higher than its $12.2 billion revenue in 2016.

Amazon Prime Has 100 Million Subscribers

No other company can compete with Amazon now when it comes to Business-to-Consumer [B2C] e-commerce. Alibaba (BABA) will remain the king of Business-to-Business [B2B] e-commerce but Amazon will remain king of B2C online selling. The 100 million-strong Prime membership program will give Amazon a steady growth driver for e-commerce.

While Alibaba and eBay (EBAY) are heavily reliant on third-party sellers to grow their online marketplaces, Amazon actually derives most of its revenue from its own online shop. Third-party sellers only accounted for $31.88 billion of Amazon’s annual revenue. The revenue from Amazon-branded goods is $108.35 billion from online customers and $5.8 billion from Amazon’s physical retail stores.

Amazon’s unique advantage in e-commerce is that has established a powerful brand that can sell anything on this planet. Amazon doesn’t manufacture the products it sells under its brand. It has partner suppliers who trust Amazon to market their products quickly and efficiently. Amazon is now the most valuable brand on the planet. It is more valuable than Apple and Google’s brands. The Amazon brand is now estimated to be worth $150 billion, higher than Apple’s $146 billion. Google’s brand valuation is only $121 billion.

(Source: City AM)

Conclusion

It is my fearless forecast that Amazon has a good chance to become the first trillion-dollar company within the next two years. This prediction is strong because Amazon is now expanding globally. Prime is now available in other countries. Prime subscription could hit 150 million before 2020. Amazon already has a large presence in India but it might also beat Walmart (WMT) in the bidding for Flipkart. Flipkart is the biggest e-commerce operator in India.

Walmart has offered $10-$12 billion to acquire 51% of Flipkart. Amazon can match this offer. Amazon has $31 billion in cash & short-term investments and $7.41 billion in free cash flow. Amazon is already the no.2 e-commerce player in India. However, taking control of Flipkart will allow amazon to almost monopolize India’s online selling business. India’s e-commerce is the fastest-growing opportunity. E-commerce in is growing at a CAGR of 29.2%. It will be worth $73 billion by 2022.

(Source: Atlas)

The Amazon mobile app now also allows international shipping to more than 100 countries (which includes China). People in Asia, Africa, Latin America can now buy over 45 million Amazon products that used to be available only for North Americans and some Europeans. Amazon will deliver products internationally and it will also take care of customs duties/paper work.

This aggressive global expansion is why Amazon is building $1.5 billion air cargo hub. Amazon has already leased 40 cargo planes but its upcoming hub will be able to host up to 100 cargo planes. Allowing Asians like me to order U.S. products is a massive growth catalyst for AMZN. We Southeast Asians are tired of depending on Lazada/Alibaba. We need Amazon to offer us its e-commerce platform.

I rate AMZN as a buy. This bullish endorsement is in line with the stock’s positive algorithmic market trend forecast scores.

Past I Know First Forecast Success with AMZN

I Know First has made accurate predictions on AMZN in the past, such as its 1 year bullish article published on December 20, 2016. In the article, we discussed Amazon “Go” shopping experience, Amazon Now taking foothold in India and PrimeAir making its first successful package delivery by drone. Since the article’s release, AMZN shares have increased by 52.70% in line with the I Know First algorithm’s forecast. See chart below.

(Source: Yahoo Finance)

This bullish forecast for AMZN was sent to I Know First subscribers on December 20, 2016.

To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

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