There have not been many, if any, companies that have risen as quickly as Amazon (AMZN 0.52%) The company’s 2023 revenue of $575 billion was a phenomenal 108 times higher than 20 years earlier. This is clearly a growth-oriented company, even at its current scale.

At the time of writing this article electronic commerce and the cloud computing giant is trading 12% below its all-time high from early July this year. Here’s why this is a great opportunity to buy this stock Growth stock.

Financial performance

Amazon has no shortage of growth levers that will continue to benefit the company. Most investors are familiar with the company’s tremendous success in the e-commerce space. In the US, 38% of all online spending is done through Amazon.com.

The rise of streaming entertainment is another tailwind that is helping the business. Amazon Prime is popular because it offers shoppers fast and free delivery. However, consumers also get access to a huge library of shows and movies. In terms of TV viewing time in the US, the video service is only behind alphabet‘s YouTube and NetflixFurther cable TV cancellations in the household will keep commitment high.

Essentially, the advent of the Internet and all things digital is the driving force for this business and will continue to be so in the future. This also applies to other major segments such as Amazon Web Services (AWS), the world’s leading Cloud Computing Platform. With an operating margin of 35.5% in the second quarter, AWS was a key profit driver.

Given the high website traffic on Amazon.com, the company is also an emerging player in digital advertising, generating revenue of $12.8 billion in the second quarter, up 20% from the same period last year. According to Insider Intelligence, Amazon is stealing market share from the heavyweights that alphabet And Meta-platforms.

Amazon has been known for its impressive revenue growth in the past. But now investors can be happy about the increasing profitability. CEO Andy Jassy and his team have been focusing on cost cutting since 2022, laying off tens of thousands of employees and working to reduce what critics call a bloated cost structure.

Operating income nearly doubled last quarter to $14.7 billion, thanks to lower year-over-year sales and marketing expenses and general and administrative expenses.

Amazon’s rating

There is no doubt that Amazon is one of the most watched companies on Earth. Everyone knows what a dominant company it is. But the stock is by no means expensive.

Stocks become a Price-to-sales ratio of 3.1. This represents a discount to the averages of the last five and ten years. This seems to be a very reasonable entry point for potential investors.

According to consensus estimates from Wall Street analysts, Amazon is expected to grow revenue and earnings per share by an average of 11% and 37% per year, respectively, between 2023 and 2026. While such forecasts should always be taken with a grain of salt, such an optimistic outlook is very encouraging.

In addition to the financial benefits, Amazon has many strong competitive advantages. The company has valuable intangible assets, such as its highly respected brand, as well as a wealth of data that it can collect. The online marketplace benefits from Network effects. Amazon’s customers, whether merchants or AWS customers, undoubtedly face switching costs when choosing a different service. Given the company’s enormous size, it certainly has cost advantages across the board, particularly in its logistics operations.

Don’t think about it too much. Amazon is a growth stock that you can definitely buy now that prices are falling.