Amazon Is the Only "Magnificent Seven" Stock I'd Buy With $1,000 Right Now
CEO Andy Jassy says Amazon could run two trillion-dollar businesses within a decade. Here's why I think he has a real shot, and why my $1,000 goes to his company first.
Amazon's CEO Andy Jassy boldly declared that there has never existed a trillion-dollar revenue business, and within the next five to ten years, there may be two. Referring to Amazon Web Services (AWS) and its online stores, including third-party sellers and physical stores, Jassy explained that Amazon is not a single bet on artificial intelligence (AI) or shopping, but both, with both sides growing stronger.
Thus, if $1,000 were to be invested in just one Magnificent Seven tech stock, Amazon would be the choice. While Microsoft, Alphabet, Meta Platforms, Nvidia, Apple, and Tesla also invest heavily in AI, Amazon offers more avenues for growth. AWS rents computing power and storage over the internet, and its sales increased by 39% to $46 billion last quarter.
Jassy anticipates over 40% growth in AWS sales for 2027 and 2028. The backlog of AWS contracts stands at $578 billion, nearly double from a year ago. AWS installs an AI chip approximately every 14 seconds, with almost as rapid a pace as the creation of cloud computing capacity. With these chips being predominantly Amazon's own, sales of Trainium AI chips and Graviton processors are experiencing triple-digit growth rates, and commitments for these chips have surged more than 20 times.
Amazon's physical stores are expanding, with nearly 15% growth in sales this year alone, and nearly 80% of retail still takes place in physical stores. Fresh groceries and everyday essentials are growing at triple the rate of the rest of the store, now accounting for about half of all units sold. Amazon Pharmacy's customers have increased by more than 60%, and Amazon Leo internet satellites are set to begin service this year.
Additionally, Zoox robotaxis provide paid rides in Las Vegas. However, Amazon's expenses are substantial, with the company expecting to spend around $220 billion this year, primarily on AI and data centers, pushing free cash flow to a negative $42.4 billion over the past year. Despite this, Amazon trades at around $267, trading below its 52-week high of $287.20, and is valued at approximately $2.89 trillion, which is roughly 28 times the profit generated from its business operations in the previous year.
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