Currently, e-commerce sales are growing at a rapid pace as consumers are able to shop for a variety of products without leaving their homes. According to a report from statista.com, worldwide retail e-commerce sales are projected to reach approximately $4 trillion by 2020, almost double 2016 sales.
Keeping the positive outlook in mind, it seems Amazon.com Inc. (AMZN, Financial) is well poised to greatly benefit from this growing trend. In 2016, the popular e-commerce company delivered healthy returns to shareholders.
Moreover, Amazon announced its fourth-quarter results in February. For the quarter, the company managed to beat bottom-line estimates by 19 cents, as earnings per share (EPS) came in at $1.54. On the other hand, the company posted revenue of $43.70 billion, missing the consensus by $980 million.
That figure, however, still represents a surge of 22.2%, compared to 21.9% in the same quarter of 2015. Most significantly, despite its massive size, Amazon endures growing its revenue at a healthy rate.
Moving ahead, voice-enabled virtual assistants look like the next new, big thing in the technology sector. Amazon seems to be taking the lead in this area with the help of its AIexa platform. The company introduced its voice-controlled device called Echo Dot grounded on its AIexa platform, and now it is pursuing the connected-cars market to install AIexa-enabled infotainment systems in vehicles.
Recently, Amazon signed deals with Volkswagen (XTER:VOW, Financial) and Ford (F, Financial) to achieve this goal, which is definitely a big step forward. This deal will surely help the company effectively compete against Alphabet’s (GOOG, Financial)(GOOGL, Financial) Google Assistant and Microsoft’s (MSFT, Financial) Cortana.
Apart from this, Amazon’s AWS segment has also performed amazingly well as it has turned into the main profit driver. Furthermore, the revenue from this segment continues to move upward with each passing quarter. The primary reason for this impressive growth is the company’s ability to work on much smaller profit margins than its competitors.
Summing up
In the past, Amazon was one of the only e-commerce websites. But e-commerce soon took a toll on traditional retailers’ earnings, forcing them to shift to online sales. Amazon, however, still has a huge advantage in the e-commerce market and is putting in a lot of effort to further strengthen its leading position.
Apart from e-commerce, the company is aggressively focusing on other high-growth markets. All in all,  Amazon looks like a great investment option for investors on the hunt for growth stocks to buy for the long term.
Disclosure: No position in the stocks mentioned in this article.
Start a free 7-day trial of Premium Membership to GuruFocus.
