Market Update: S&P 500 Shows Positive Trends
As of May 15th, the S&P 500 index has moved back into positive territory for 2025. This widely monitored benchmark has had a tumultuous year, largely influenced by uncertainties surrounding trade policies. Yet, since early April, it has been on an upward trajectory, fostering renewed interest among investors.
Nonetheless, some companies are still grappling with significant losses. For instance, stocks in major tech companies surged by 850% over the past decade, but they currently sit 15% below their all-time highs. This presents a potential opportunity for savvy investors.
Perhaps this is why some consider this standout stock a smart buy for the long term.
Positioned to Benefit from Multiple Growth Engines
No doubt, many investors are familiar with the e-commerce giant Amazon. It commands nearly 40% of all online spending in the U.S., buoyed by the ongoing growth in e-commerce. The recent suspension of tariffs could enhance confidence among both Amazon’s sellers and consumers.
Just in April, the company’s online marketplace attracted 2.6 billion visitors, drawing significant interest that many businesses are now beginning to capitalize on. In fact, during the first quarter, Amazon generated an impressive $13.9 billion from advertising revenue—an area that, while sometimes overshadowed, is quickly becoming a vital financial contributor.
Digital advertising can yield hefty margins that may boost Amazon’s profitability over time. It’s also worth noting that competitors like Alphabet and Meta have a significant share of the digital ad market.
With over 200 million subscribers, Amazon Prime Video stands out as a leading streaming service. The trend of cutting traditional cable has nudged consumers toward internet-based solutions.
Though it might not appear so at first glance, we are still early in the transition of IT spending from traditional setups to cloud services. Amazon’s CEO, Andy Jassy, estimates that only about 15% of businesses have made the jump to the cloud so far. Through Amazon Web Services (AWS), the company leads the cloud computing industry, boasting an impressive operating profit margin of 39.5% in the recent quarter.
Then there’s AWS’s potential in the realm of artificial intelligence (AI). Amazon is developing its own graphics processing unit and offers a variety of products and services that help clients leverage AI in their operations.
With trends in e-commerce, digital advertising, streaming services, cloud computing, and AI, Amazon is uniquely positioned to foster sustainable long-term growth.
Is Amazon an Easy Stock to Buy?
It’s certainly true that few stocks can rival Amazon’s past performance. Over the last two decades, its shares have soared 12,010%. However, with stock prices currently 15% below their peak, investors might find a price-to-sales ratio of 3.4 attractive. While this aligns with the average from the past five years, I think it’s a bit of a stretch.
Despite its twelve-month net sales of $650 billion and a market cap of $2.2 trillion, there may be concerns that Amazon will struggle to generate substantial returns going forward. But similar arguments were made five or ten years ago about its size being a potential drawback, and yet the stock still proved beneficial for investors.
According to Wall Street consensus estimates, the company is expected to see earnings per share growth of 9.4% and 17.5% over the next couple of years. Considering the robust growth mentioned earlier, I think there’s good reason to believe Amazon can deliver sustainable financial benefits for a long time. This makes it a compelling stock to buy now and hold for the next five years.
