3 Reasons to Buy Amazon Stock Now – TradingView News

In this Amazon boom AMZN the stock remains one of the best companies to invest in.

The giant Magnificent 7, Amazon’s dominant presence in the world of e-commerce and cloud computing, positions the company to take advantage of ongoing secular growth trends.

From an AI perspective, key integrations into a company’s existing operations can provide the type of operating leverage investors are looking for.

In addition to the key cost efficiencies the company has achieved by reducing capital expenditure over time, this is a recipe for significant cash flow growth.

Since companies are valued essentially at the discounted value of all future cash flows, this is a great thing for long-term investors.

With that said, let’s look at three reasons why AMZN stock seems like a good buy in this environment.

PI Project and AMZN Inventory

At Amazon fulfillment centers across North America, the company’s “Project PI” artificial intelligence model scans millions of products for defects every day.

Using generative artificial intelligence and computer vision, it detected problems such as damage or incorrect colors and sizes before shipping to customers.

Additionally, Project PI identified the root causes of the problems, enabling preventive measures to be taken to avoid future problems.

Before shipping, Amazon products pass through imaging tunnels where Project PI uses computer vision to detect defects such as bent book covers.

If a defect was discovered, Amazon would isolate the product for further investigation. The company has also made a decision whether to resell, donate or repurpose the marked items.

The model improved manual inspections and was expected to expand to more locations in 2024.

Amazon’s management team has placed great emphasis on the importance of improving the customer experience.

With artificial intelligence, Amazon can ensure this by using it to detect products before they are shipped. This will benefit everyone: Amazon, its retail partners and their customers.

In short, Project PI is an example of Amazon’s customer-centric approach and its commitment to integrating AI innovations to combat climate change.

More AI innovations will come

Amazon teams used a generative AI system including a multimodal LLM to dig deeper into the roots of customer complaints.

The company will use customer feedback, images from Project PI, and other data sources to identify issues and iteratively improve the system.

For example, if a customer reported receiving the wrong size sheets, the system will check the claim against fulfillment center photos to determine the discrepancy.

Amazon’s technology is intended to help trading partners improve access to defect data.

For example, if an affiliate accidentally labels a product in the wrong size, Amazon will notify the affiliate to prevent future errors.

The business is growing rapidly

Amazon’s main profit driver is AWS, its cloud computing segment, which generated $24.6 billion in operating income last year, two-thirds of the total.

AWS’s 2023 operating margin of 27.1% significantly exceeds AWS’s 4% retail operating margin in North America. Notably, these results dwarf the fact that Amazon’s international retail segment did not turn a profit last year.

In the first quarter, Amazon in North America and international segments saw strong sales growth and profitability improved, driven by higher unit sales and advertising revenues.

North American operating income rose to $5 billion from $898 million, and the international company turned a loss of $1.2 billion into a profit of $903 million.

With advertising services continuing to grow at over 20%, Amazon’s advertising business has significant potential as a major profit center in the future.

As of the date of publication, Chris MacDonald did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s Editorial Guidelines.

Chris MacDonald’s passion for investing led him to pursue an MBA in Finance and over the past 15 years he has taken on a number of leadership positions in corporate finance and venture capital. His past experience as a financial analyst, combined with his zeal for identifying undervalued growth opportunities, contributes to his conservative, long-term investment perspective.