The Most Compelling Reason to Buy Amazon Stock Right Now

$19.3 million. That's how much money you'd have today if you bought $10,000 worth of Amazon (AMZN -0.59%) shares at its IPO in 1997 and never sold. Could you make a 1,930-fold gain over the next few decades by investing in Amazon? Probably not. However, I think the stock will remain a big winner. And there's one most compelling reason to buy Amazon stock right now. Good reasons to buy Amazon stock Don't get me wrong: I'm not saying there's only one reason to invest in Amazon now. I can think of quite a few good reasons to buy the stock. For one thing, Amazon is more attractively valued than it's been in quite a while. The stock has fallen over 20% below its previous peak earlier this year. Anytime Amazon has declined by this level or more in the past it presented a fantastic buying opportunity. Sure, the company's price-to-earnings ratio of 34 might seem high. However, the earnings multiple is the lowest it's been since the market meltdown in 2008, when investors were arguably as afraid as they'd been post-World War II. Another reason to buy Amazon is that its profitability is increasing rapidly. Management is laser-focused on the bottom line -- and it shows. The company's earnings skyrocketed nearly 89% year over year in the fourth quarter of 2024. I view Amazon's entrance into new markets as a great reason to invest in the company, too. It's already making waves in healthcare with Amazon Pharmacy and the acquisition of primary care provider One Medical. Amazon will soon launch its Project Kuiper satellites that provide internet access across the world. I like the prospects for its Zoox self-driving car unit as well. The most compelling reason to invest in Amazon As good as those reasons for buying Amazon stock are, though, none present the most compelling reason to invest in Amazon. The single most compelling reason to invest in Amazon right now, in my opinion, is the company's dominant and expanding position in three interconnecting high-growth markets: e-commerce, cloud services, and artificial intelligence (AI). Amazon is clearly the 800-pound gorilla in e-commerce and has been for years. You might not think the company has much room to grow in this space. CEO Andy Jassy would strongly disagree. In Amazon's October 2024 earnings call, Jassy noted that Amazon only has roughly a 1% share of the global retail market. He believes that much of the 80% to 85% of retail still in brick-and-mortar stores will shift to e-commerce over the next 10 to 20 years. This shift will create plenty of winners, with Amazon in the driver's seat. The company's strongest growth driver these days is Amazon Web Services (AWS). Although there are several other formidable cloud service providers, AWS remains the largest with a market share of around 30%. The dynamics in the cloud service market are similar to those in e-commerce: In the ballpark of 85% of global IT spending is still on-premises, with the rest in the cloud. Jassy thinks those numbers will flip over the next 10 to 15 years. That leads me to AI. One of the main reasons Jassy's prediction about cloud services growth is likely to be right is the rapid adoption of AI. Amazon's increasing profitability is also being driven in part by the use of AI to improve its operational efficiency. I suspect we'll be astonished 20 years from now to see how much AI has changed the way we live. And I fully expect Amazon will still be one of the key AI leaders and innovators. Amazon's "culture of Why" Could Amazon lose its way and fail to live up to my expectations? Maybe. However, I don't think this will happen because of something Jassy discussed in his latest letter to shareholders. In each annual letter, Jassy shares some insights into, to use his words, "what makes Amazon tick." He explained recently that one key ingredient to the company's ongoing success is its "culture of Why." Jassy explained, "If we want to have a chance at succeeding in our mission, we have to constantly question everything around us." In other words, Amazon continually asks, "Why?" Jassy elaborated on this concept, linking it to many of Amazon's biggest moves. The introduction of the Kindle e-reader came from questioning why readers couldn't have access to every book ever written in a small device. Amazon's e-commerce platform stemmed from asking why limit online shopping to books. AWS originated from asking why companies needed to pay for their own expensive data centers and infrastructure. I think Jassy is right. I still think the most compelling reason to buy Amazon stock right now is that the company is poised to leverage its market leadership in e-commerce, cloud services, and AI to deliver exceptional long-term growth. But I believe the reason Amazon will be able to be successful is its "culture of Why."