At first glance, I can see why Amazon (NASDAQ: AMZN) might not appeal to some Stocks and Shares ISA investors. The company is already a $2.2trn juggernaut and has well-established operations around the world. Surely, one may assume, it can’t get too much bigger.
Here are five reason why I think Amazon stock could still make for a tremendous long-term investment.
Bullish analysts
The first reason is that Wall Street remains very bullish. Among 71 analysts rating the stock in the past three months, a whopping 95.7% see it as either a Buy or Strong Buy. Only three rate it as a Hold, and none recommend Selling.
Of course, investors shouldn’t rely solely on the views of brokers to pick stocks. One quarterly earnings miss from Amazon could quickly see sentiment shift. Most of Wall Street is focused on the next couple of quarters, rather than the longer term.
Nevertheless, it’s still the job of these experts to know Amazon’s business inside out. So, I find it reassuring that such an overwhelming majority of them are bullish on the stock.
For what it’s worth, the consensus 12-month share price target among 61 of these analysts is $238. That’s roughly 13% higher than the current price.
Surging profits
The fundamental driver of a stock price over time is an increase in earnings. Therefore, it’s encouraging to see that Amazon’s bottom line is tipped to grow significantly.
Last year, the tech giant reported earnings per share (EPS) of $5.53 from revenue of $638bn. By 2028, those figures are expected to be $914bn and $10.97, respectively. So, almost a doubling in EPS.
Meanwhile, free cash flow is forecast to more than double over this time, despite the company investing heavily in various growth initiatives.
One thing that could throw a spanner in the works here though is rising US inflation due to tariffs. If this keeps spiking higher, consumers could reign in spending, negatively impacting growth in Amazon’s core e-commerce operation.
In this scenario, more people might turn to cheap shopping apps like Temu and Shein. That said, these firms are also facing challenges from tariffs, forcing them to hike prices.
Margin expansion
Not only are Amazon’s profits expected to motor higher, but margins are also likely to improve. Indeed, this was one of the reasons why billionaire Bill Ackman recently took a stake for his hedge fund (Pershing Square).
We think [efficiency] will allow for more profit margin expansion at a high rate of revenue growth.
Pershing Square Holdings, Q1 2025 earnings call
Amazon is using artificial intelligence (AI) to improve efficiency across its business, which should translate into better margins.
Future technology trends
Speaking of AI, the company is investing massively in the technology. For 2025, it has allocated over $100bn to capital expenditures, much of it AI-related infrastructure/data centres.
According to The Information, Amazon is also investing in humanoid robots that could one day deliver packages to front doors. It’s also trialling drone deliveries and its Zoox self-driving cars.
Therefore, the firm remains at the centre of multiple cutting-edge technology trends.
Attractive valuation
Last but certainly not least, the stock is currently trading at 33 times forward earnings. Historically, that’s very low for Amazon, and makes this a stock worth considering right now for long-term investors.
