Amazon Q4 - Cloud slows

Amazon had good Q4 numbers out last week but the market seemed too focused on a modest deceleration in the fortunes of their AWS division, so the shares sold off by 4% the next day.

I'm here to remind you that such short-term share price movements are irrelevant, and that Amazon is a great company that you ought to own more of, not less.

We first added Amazon as a recommended stock in April 2011, when they traded at $9 per share. Now, they are at $233. The all-time high is just above $242. It hasn't been a smooth ride, but it's always been a good one to "buy and hold".

Amazon started out as an e-retailer, and made losses for a long time as it built out its distribution network. Now it's very profitable, thanks to high-margin activities like cloud hosting, advertising, subscriptions and third-party services. Both its sales and its margins have expanded enormously over the last decade.

Amazon says it will incur about $104 billion in capital expenditure in 2025. Much of this is to underpin their AI offerings, called Nova, Bedrock, SageMaker and Amazon Q, where clients such as Palantir, Robinhood, SAP, Deloitte, the US Army, Intuit, PayPal, Northrop Grumman, Japan Airlines and many others build their AI apps on AWS.

Margins in the e-retailing business are improving, thanks to both inward and outbound supply chain developments and automation. International operations are expanding. Have you used Amazon in South Africa? If not, why not?

Amazon remains a compelling buy. Load up!