Why Amazon’s Ongoing Wall Street Rally is Showing No Signs of Slowing for Investors

Amazon (NASDAQ: AMZN) may have surpassed a $2 trillion market capitalization for the first time in 2024, but its road to $3 trillion may be relatively brief given the tech giant’s relentless innovation pipeline and growth-focused approach.

The stock is up more than 168% since the beginning of 2023, and the recent presidential election victory for the pro-growth and deregulation-focused President-elect Donald Trump appears to play into the hands of Amazon, which was quick to donate $1m to Trump’s inaugural fund.

While stocks like Nvidia have stolen many headlines in recent years due to their sustained outperformance amid the ongoing generative AI boom, Amazon’s impressive growth had been going under the radar of investors in the wake of Jeff Bezos’s decision to step down as CEO in 2021.

However, AMZN’s growth in 2024 has outpaced the likes of Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), and Alphabet (NASDAQ: GOOG), and with the company appearing to be in the process of converting a strong third-quarter earnings season into more growth-focused projects, there’s no reason why the stock can’t become the star of the so-called magnificent seven in 2025.

Building on Stellar Earnings

Amazon’s impressive Q3 2024 earnings will form the foundation for growth into 2025. The stock itself rallied 7% on the expectation-beating performance of the company throughout the third quarter, and there are already signs of the tech giants investing heavily in growth amid the market optimism.

Impressively, earnings per share (EPS) came in at $1.43, handily beating LSEG expectations of $1.14. Likewise, reported revenue of $158.88 billion exceeded expectations by more than $1.6 billion.

Even in Amazon’s misses came plenty of optimism. Although Amazon Web Services revenue fell $100 million below expectations of $27.5 billion, sales accelerated 19% during the quarter, outpacing its year-ago growth rate of 12%.

According to Insider Monkey data, AMZN currently ranks as the most-held stock by hedge funds, with 286 hedge fund investors buying into the growth potential of Amazon. Retail interest in how to trade in Amazon stock is strong too, with approximately 38% of AMZN’s holders being retail investors and public companies.

President-elect Donald Trump’s promise to lower corporation tax to 15% from 21% for companies that manufacture in the US will certainly play into the hands of Amazon, and with the firm already seeking to grow its operations domestically, Trump’s second term in the White House may become the cornerstone for the stock’s rally to $3 trillion and beyond in the not-too-distant future.

Amazon’s Innovation Pipeline

Off the back of the new initiatives for investment in US industry, Amazon’s investment plan to create at least five new data center regions featuring a $10 billion investment in Ohio was recently announced to build on the firm’s heavy focus on embracing emerging technologies.

Amazon’s plans for Ohio follow a $7.8 billion investment declared in 2023 and $6 billion in the year prior, bringing the tech giant’s total proposed investment in Ohio to more than $23 billion.

The development of data centers will help to drive cloud computing that edges technological breakthroughs in artificial intelligence, machine learning, and various other emerging tech trends.

We’re also seeing plenty of evidence of Amazon expanding its operations in the here and now, and December saw the announcement of Amazon Autos, marking the company’s move into online car sales as an eCommerce business model.

Amazon Autos allows users to discover, order, and buy new cars, trucks, and SUVs from dealerships. The move is set to reduce the friction in purchasing cars and has launched in a joint endeavor with Hyundai across 48 cities domestically including New York, Los Angeles, Chicago, Atlanta, and Boston.

With more cities scheduled to be added in 2025, investors can be confident in Amazon’s long-term growth strategies both for its eCommerce platform and Web Services.

Strikes Could Dampen Prospects

With a Trump presidency that’s expected to aid the growth of blue chip stocks like Amazon looming, it appears that the biggest danger to the firm’s prosperity may be its own reputation.

December saw thousands of Amazon workers at the company’s first unionized warehouse in New York vote to take strike action in protest against the firm refusing to recognize the union and negotiate a contract at its facility.

The union of around 5,500 workers has claimed that Amazon has failed to show them the ‘respect they have earned’, and strikes could not only disrupt the tech leader’s impressive Wall Street performance in recent years but also shine a light on working conditions at the company.

With The Occupational Safety and Health Administration (OSHA) issuing citations against six Amazon warehouses over unsafe working conditions and failure to report injuries in 2022 and 2023, Amazon could face a reputational battle should more warehouse workers unionize in the months ahead.

The Road to $3 Trillion

Although the road ahead may not be entirely free of obstacles, Amazon’s innovation pipeline and what appears to be a conducive Trump Presidency on the way are likely to help the stock reach new heights in 2025 and beyond.

For the months ahead, all eyes will be on AMZN’s progress towards becoming a $3 trillion stock. With the development of data centers and a commitment to building into new markets, Amazon’s potential may mean that a $3 trillion market capitalization is just the beginning.