In the wake of the rapid 35% decline of the Nasdaq Composite in 2022 and its subsequent 43% rebound in 2023, market analysts suggest that another powerful year could be on the horizon. Taking stock of 51 years of data, history illustrates that in years following a market recovery, the tech-centric index has again gained in a second year by an average of 19%. This trend offers reason to believe that the rally has enduring potential, and conditions could soon be set for another robust year in the stock market. The market’s overall gains in 2023 were bolstered by seven preferred stocks, one of which, Amazon, shows particular promise for investors in the current market.
Despite significant macroeconomic challenges throughout the past few years that created the conditions of a “perfect storm” for Amazon, the company’s future is looking up. High inflation resulted in reduced consumer discretionary spending, which then dampened online purchases as a first casualty. However, new figures from 2023 have yet to be summed, but resources suggest that Amazon still owns an estimated 38% of all U.S. online sales, leaving behind 14 competitors combined. As market experts anticipate a 9% rise in e-commerce sales in 2024, reaching $6.3 trillion, Amazon stands to benefit from this gradual windfall.
Furthermore, one of Amazon’s primary growth engines in recent years has been its digital advertising, specifically in its increased permissibility due to its already established user base. Research also indicates that digital advertising may increase by 13.2% in 2024 after its ascent of more than 10% last year. While challenges still linger, Amazon, the world’s main provider of cloud infrastructure services, expects cloud adoption to reaccelerate in the upcoming year. Despite a long history of using artificial intelligence (AI) to refine operations, Amazon still appears steady and reasonably valued at 2 times next year’s expected sales. Amidst the recovery of the ad market and e-commerce, stock investors have the potential to achieve significant returns by capitalizing on the undervalued Amazon before its stock rises even more.