Why Amazon Is a Buy After Its Stock Price Slump
Having fallen 10% in the last year, Amazon.com Inc. (NASDAQ:AMZN) could still have investment appeal.
The company’s valuation may still be relatively high, but its growth prospects in areas such as the smart home segment and cloud computing could stimulate its profitability and stock price over the long run.
Smart home market
Amazon’s continued investment in its Alexa virtual assistant could increase its share of the fast-growing smart home device market. Global sales of smart speakers are forecasted to grow at a compound annual rate of 39% between 2019 and 2025. They form part of a wider smart home market that is expected to be worth $53 billion by 2022, which is 51% higher than its current $35 billion value.
The company added a variety of innovative features to its Alexa virtual assistant in the second quarter that could increase its differentiation versus sector peers. One of these features, Alexa Announcements, allows users to broadcast a one-way message to their Alexa devices.
It also released the Alexa Privacy Hub that provides its users with greater control over their Alexa experience. In addition, Alexa Guard was released in the U.S. This provides its users with greater safety protection through detecting the sounds of smoke alarms and glass breaking.
The company’s innovative features are contributing to a rise in the number of smart home devices that are compatible with Alexa. This should strengthen Amazon’s market position and widen its economic moat.
Source: finance.yahoo.com October 5, 2019