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Amazon: Top Large Cap Idea For 2022

Apr. 05, 2022 8:58 AM ETAmazon.com, Inc. (AMZN)EBAY, FDX, GOOG, GOOGL, MELI, MSFT, UPS, WMT43 Comments


  • Amazon's margin expansion opportunity for the e-commerce segment brought about by normalisation of supply chain and pandemic challenges is not yet priced into the market.
  • International e-commerce brings huge optionality and has long growth potential and brings upside to Amazon's revenues.
  • As AWS continues to build on scale and re-invest into the business, I believe that it will continue to improve on its industry leading position in cloud computing.
  • With the recent stock split and repurchase programme announcement, as well as improving disclosure on business segments, I am of the view that Amazon's new management is becoming more shareholder friendly.
  • Based on my SOTP valuation for Amazon, I derived a target price of $4,850 for Amazon, implying an upside of 44% from current levels.

Amazon prime boxes delivered to a front door

Daria Nipot/iStock Editorial via Getty Images

With a market capitalization of $1.7 trillion, and as a household e-commerce name, Amazon (NASDAQ:AMZN) needs no introduction. I am initiating Amazon as my top large cap idea for 2022 and provide my SOTP

Amazon Revenue mix

Revenue mix of Amazon (Author generated)

AWS exponential growth in revenues and operating income as it builds scale

AWS exponential growth in revenues and operating income as it builds scale (Nextplatform)

Effect of stock splits on share prices of big tech relative to S&P 500

Effect of stock splits on share prices of big tech relative to S&P 500 (Author generated)

Amazon capex

Amazon's capex as a % of sales (UBS)

Amazon 2020 capex

Amazon's capex in 2020 in dollars (UBS)

Market share of e-commerce retailers in the US

Market share of e-commerce retailers in the US (Statista)

Market share of cloud infrastructure vendors globally

Market share of cloud infrastructure vendors globally (Statista)

Amazon stock SOTP valuation

SOTP valuation for Amazon (Author generated)

This article was written by

Simple Investing profile picture
High conviction growth and value ideas for long-term outperformance

I am a portfolio manager with experience working for a hedge fund and a long-only equity fund with more than $1 billion in assets under management and I have a track record for outperformance in my portfolio. I have been writing consistently, with an article published each day on Seeking Alpha and on my Marketplace service.

Focused on long term investing, I believe in a barbell strategy in a portfolio, where there are both growth and value elements, which will be reflected in my articles. 

I will be running a Marketplace service, Outperforming the Market, where I will share with you The Barbell Portfolio, which consists of high conviction growth and value stocks to help you outperform in the long-term, as well as The Price Target Report, which tells subscribers how much discount the stock is trading to intrinsic value and the upside potential. Lastly, subscribers will be able to get direct access to me and can ask me anything about the investment process or stock picks.

CFA charter holder and graduated with degrees in Finance and Accounting.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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