Why Amazon.com Stock Is at a New High

Amazon.com Inc. (NASDAQ:AMZN) Stock Hits an All-time High

Amazon.com Inc. (NASDAQ:AMZN) stock has broken an all-time high today. Its market cap now stands at over $350 billion, making it one of the five largest companies in the world behind Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOGL), Microsoft Corporation (NASDAQ:MSFT) and Exxon Mobil Corporation (NYSE:XOM).


While it's the flavor of the month to either portray Amazon.com as the soon to be largest company in the world, or as the poster child for an overvalued stock. What we rarely read in these narratives is fact. Let's stick with facts in some staggering charts, and point out the good and the bad.

AMAZON.COM INC. (NASDAQ:AMZN) REVENUE
We'll start with two staggering revenue charts. First, we look at Amazon.com in isolation. Here is the firm's revenue chart rolled up into trailing twelve month periods.

AMZN has seen revenue measured in trailing twelve month periods rise every quarter for over 10 straight years. Perhaps more impressive is that even on an enormous revenue base, the growth over the last year still stands at 23.3%.

But, we need to put that revenue number into context. Here is a chart of revenue over the last year for all technology companies with market caps above $50 billion.

While Apple Inc. (NASDAQ:AAPL) will roll off of almost anyone's tongue as the largest revenue producer in technology, far fewer would know that Amazon.com is in fact carrying the second largest revenue base in the world for technology companies, standing at over $113 billion. While that's a far cry from Apple at over $227 billion, it is larger than Microsoft, IBM and Alphabet.

AMAZON.COM INC. (NASDAQ:AMZN) GROSS MARGIN
Revenue growth alone isn't enough to justify a valuation that puts Amazon.com in the five largest companies in the world. The momentum behind the stock rise has been driven by the reality that Amazon.com is now able to grow it margins as revenue increases. That's the holy grail of financial metrics. With the introduction of Amazon Web Services (AWS) and Amazon Prime at around 2006, Amazon.com has seen gross margins explode higher.

Of all the charts we will look at, it's this one that carries perhaps the most value. Amazon.com is growing revenue faster than every mega cap technology company not named Facebook, but no other firm is seeing an increase in gross margin like AMZN is.

AMAZON.COM INC. (NASDAQ:AMZN) NET INCOME
With revenue and gross margin booming, Amazon.com is now finally seeing legitimate profits. Here is the sixteen year chart of net income over trailing twelve month periods.

Not only did AMZN post its largest quarterly earnings last quarter and its largest annual earnings, but the number is expected to grow exponentially. While $1.1.7 billion in after tax earnings in the last year pales in comparison to Alphabet Inc. (NASDAQ:GOOGL) and Apple, Thomson First Call estimates call for $9.91 in earnings per share for 2017 compared with less than one third of that for 2015.

AMAZON.COM INC. (NASDAQ:AMZN) R&D
The final chart for Amazon.com is unbelievable. While everything we have discussed is backward looking, the future is defined by innovation. Here is a chart hat ranks every company in every industry over $100 billion in market cap on research and development over the last year.

It may seem unreal, but Amazon.com spends more on R&D than Alphabet (GOOGL), Apple (AAPL), Intel, Microsoft (MSFT) and every other company in the world.

AMAZON.COM INC. (NASDAQ:AMZN) CONCLUSION
Amazon.com is seeing revenue growth accelerate and now stands as the second largest revenue generator in all of technology behind only Apple Inc. (NASDAQ:AAPL) and well ahead of GOOGL and MSFT. The company sees gross margins rising faster than any other firm, earnings growing rapidly and spends more on R&D than any other firm, including the hallowed Alphabet Inc. (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) -- the two firms most famous for R&D expenditures.

And so, the final image is simply the Amazon.com stock chart.

WHY THIS MATTERS
Pundits can argue over Amazon's valuation, or which of the mega caps will outperform, but the reality is that these companies have already been "discovered." At CML we identify the revolutionary thematic transformations that are coming and then discover the companies that will benefit most from them to find the "next Amazon" or the "next Google." Our research sits side-by-side with Goldman Sachs, Morgan Stanley and the rest on professional terminals, but we are the anti-institution. Our purpose is to break the information monopoly held by the top .1%.

Each company in our 'Top Picks' is the single winner in an exploding thematic shift like artificial intelligence, Internet of Things, drones, biotech and more. In fact, here are just two of the trends that will radically affect the future that we are ahead of:

The Internet of Things (IoT) market will be measured in trillions of dollars as of next year. CML Pro has named the top two companies that will benefit. Then there's cyber security:

Market correction or not, recession or not, the growth in this area is a near certainty, even if projections come down, this is happening. CML Pro has named the single best cyber security stock to benefit from this theme.

These are just two of the themes we have identified and this is just one of the fantastic reports CML Pro members get along with all the visual tools, the precious few thematic top picks for 2016, research dossiers and alerts. For a limited time we are offering CML Pro at a 90% discount for $10/mo. with a lifetime guaranteed rate. Join Us: Get the most advanced premium research delivered to your inbox along with access to visual tools and data that until now has only been made available to the top 1%.