These bad days will last a long time Amazon (NASDAQ:Amazon). As an earnings slump dims hopes for Amazon stock, people are wondering if it’s still worth holding onto.

Second-quarter earnings of $13.5 billion, $1.26 per diluted share, and revenue of $148 billion were not considered good enough. Amazon’s forecast of $154 billion to $158.5 billion in revenue for the current quarter also fell short of estimates.

Even more worrying was the conference call. Consumers are “more cautious with the money they spend” and “continue to bargain for lower prices,” analysts were told.

The earnings sent Amazon down $30/share, or 15%. Any recovery was buried by the tech crash on August 5 and a low of $154.13. Amazon traded at $163 on August 7, a 13% drop in a single week.

Can this cloud giant recover?

Sum of the parts

Ten years ago, I began assessing Amazon’s value using a “sum of the parts” analysis. A new perspective based on that analysis raises concerns.

Start with retail and logistics. Walmart (NYSE:WMT) is still worth $100 billion more a year there, with $161 billion in sales last quarter. Its stock is up 27% this year, but its market cap is still under $545 billion. Amazon’s retail sales are probably worth about $450 billion.

Amazon Web Services (AWS) is Amazon’s most important asset. Revenues are expected to exceed $100 billion this year, including 35% of net profit. The market capitalization of cloud services is usually 10 times revenue. That means $1 trillion for the cloud.

Then there is Amazon Prime Video. Netflix (NASDAQ:NFLX) is the market leader there with a market capitalization of 270 billion US dollars. Netflix now sells ads like Amazon, so Amazon’s advertising revenue must also be included here.

The total is $1.72 trillion. That’s exactly Amazon’s market capitalization as of August 7. The company is fully valued.

Amazon fatigue

Yesterday’s miracle is today’s assumption. What was “big enough to dominate” yesterday is today “big enough to demand regulation.”

Let’s start with business. The FTC and several states have filed antitrust lawsuits, and Arizona has also accused consumers of fraud because of problems canceling Amazon Prime.

Returns have become a problem. Retailers who accept returns are inundated with packages. Criminals are taking advantage of return policies.

Amazon is now the largest logistics company in the country, but that brings its own problems. I love the Rivian (NASDAQ:RIVN) made electric trucks, but I’ve also recently received Amazon deliveries using gasoline-powered trucks and even some private cars. Amazon is overloaded.

Amazon’s AI strategy is agnostic and supports models from Meta-platforms (NASDAQ:META) and Anthropic, where it acts as an investor.

In his conference call, CEO Andy Jassy praised Amazon Web Services’ 19% growth. But AWS continues to lose ground to Microsoft (NASDAQ:MSFTA few years ago, Amazon was ahead of Microsoft in market share at 30:20. Now the ratio is 31:25.

Amazon’s advertising revenue was $12.8 billion last quarter, up 20 percent but still below analyst estimates. Amazon says it has 200 million Prime members and opened the video service to advertising in January unless customers pay $3 a month.

And then there’s the healthcare sector, where nobody is making money. Amazon has expanded its PillPack prescription service to include One Medical’s telemedicine services. Prime members have to pay $9 a month for access. Amazon is still making a loss, but not as much as planned.

The conclusion

I continue to believe Amazon is a stock to own, not buy. Despite recent losses, shares are up 9% for 2024, 15% over the past year, and 80% over the past five years.

Amazon is now everywhere in e-commerce, which brings bad headlines. CEO Jassy is nothing special, neither his penchant for automation, nor his distrust of unions, nor his desire to force teleworkers into the office.

He’ll face all of these headwinds and more over the next year. But I suspect that despite everything, Amazon stock will be worth over $2 trillion this time next year.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.

At the time of publication, Dana Blankenhorn held a LONG position in AMZN and MSFT. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.