Amazon is already one of the largest companies on the planet. But could its stock (AMZN) be poised to outpace the market for the next five years? Some analysts say yes — with many focused on the tech giant’s innovations in artificial intelligence (AI).
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Here are four reasons why AMZN could make a great addition to your portfolio.
Mostly dominated by Nvidia, 2024 was the year of AI. Yet, some experts say Amazon could actually be a smarter long-term play. The company is investing more in its business than every other big tech company — it spent $75 billion on capital expenditures in 2024 alone.
Amazon has applied much of this investment into creating a flagship line of AI training chips. It has recruited top semiconductor engineers and expanded its building teams in Austin and Silicon Valley, according to Manufacturing Digital.
The early results are very promising. Amazon’s AI chips show 30% to 40% better price performance than current GPU-based instances, which could threaten Nvidia’s dominance, Forbes reported. Apple and Anthropic have already committed to using Amazon’s new chips to train their models.
Amazon has launched six foundational large language models (LLMs) that produce images, videos and text. They cost as much as 75% less to use than other models, such as ChatGPT and Claude.
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AI innovations represent only a part of Amazon’s growth potential. The expansion and operations optimization of the company never seem to end — as shown in industries including:
Amazon may disrupt every industry in its crosshairs with its frontline technologies and robust distribution networks. Over the next five years, it could unlock billions of dollars in new revenue from such bold initiatives.
Customer loyalty is another major advantage for Amazon.
About 200 million Amazon Prime members worldwide enjoy discounts on everything from e-commerce deliveries to audiobooks. These savings create loyalty, especially among its large younger user base, and allow Amazon to have an easier path toward successful expansion.
For example, Amazon’s recent foray into healthcare with One Medical and Amazon Pharmacy is expected to disrupt the healthcare industry by increasing access and lowering costs — and those lower costs could both inspire loyalty in current members and attract new customers.
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