Technology Market in 2024
2024 has been a successful year for large tech companies. After the slump of 2022, the sector has recovered and demonstrated impressive dynamics. The group of market leaders – the so-called “magnificent seven” (Apple, Microsoft, Amazon, Alphabet/Google, Meta, NVIDIA, Tesla) – has soared in price, showing an average total growth of about 60% per year. Amazon shares stood out: in 2024, they grew by about 44%, significantly outperforming Nasdaq (+29% per year). Investors have once again actively invested in the tech sector against the backdrop of stabilizing macroeconomic conditions and new trends, the main one of which was a breakthrough in artificial intelligence (AI).
Almost all tech giants announced increased investment in AI at the end of the year. For example, Amazon, Google, Microsoft, and Meta have planned record capital expenditures on cloud infrastructure and AI services development – from $60–80 billion for Microsoft and Meta to $75 billion for Alphabet (Google) and over $100 billion for Amazon for 2025. Such investments reflect the companies’ confidence in the long-term growth of new technologies. At the same time, consumer demand has remained quite stable: Amazon noted that the 2024 holiday season was its “best,” providing online sales growth of 7% in the fourth quarter. Together, these factors created a favorable backdrop for tech stocks and increased interest in Amazon.
Amazon Fundamentals
Fundamentally, Amazon ended 2024 on a high note. The company’s revenue for the year grew by 11%, to $638 billion, and net profit almost doubled – from $30.4 billion in 2023 to $59.2 billion in 2024. In the fourth quarter, Amazon received a record $20 billion net profit against ~$10.6 billion a year earlier. The business marginality increased significantly due to cost optimization and the development of profitable segments. Operating profit in Q4 jumped by 61% (to $21.2 billion), and the operating margin expanded to 11.3% (a year earlier it was ~7.8%).
Analysts note that the shift in the revenue structure towards high-margin areas (AWS cloud and advertising), together with increased efficiency of the retail business, improved the risk/return balance and made the company more attractive to investors. Amazon is not only growing its revenue but also increasing its profit margin on each dollar of sales—a significant advantage from a fundamental analysis perspective.
Comparison with Сompetitors: Apple, Microsoft, Google
Compared to other tech giants, Amazon looks quite convincing. Apple earned about $94 billion in net profit in the 2024 fiscal year – a colossal result. Apple’s business growth was modest (revenue increased by only a few percent, and profit decreased compared to the 2022 peak). Alphabet (Google), which earns its main profit from advertising, on the contrary, sharply increased its profit to about $100 billion by the end of 2024 due to the recovery of the advertising market and cost optimization. Microsoft continued its steady growth due to cloud and enterprise services – in the 2024 fiscal year, its revenue grew by 16%, and operating profit – by 24%.
Thus, in terms of absolute profit, Amazon is still inferior to Apple and Google. However, Amazon’s growth rate is much higher: almost +95% in net profit for the year against single-digit percentages for competitors. In addition, Amazon has a more diversified business model. While Apple relies heavily on iPhone sales and consumer services and Alphabet on advertising revenue, Amazon combines several strong businesses. That makes the company less vulnerable to downturns in any one market segment. Investors also consider the stock’s valuation: After the 2024 rally, Amazon shares traded at a forward P/E of around 27–28, comparable to or lower than Apple and Microsoft, with higher expected growth.
Many analysts are bullish on their valuations. Wall Street’s consensus forecast for Amazon remains bullish, with most analysts recommending Amazon shares as a buy. Amazon’s impressive growth, broad business reach, and reasonable valuation make it a strong investment choice compared to other tech giants.
Key Business Areas of Amazon
Amazon’s success is largely due to three key segments that are developing in parallel:
Cloud Services (AWS) – The Amazon Web Services division remains the largest cloud provider in the world. AWS revenue in Q4 2024 grew by 19% year-on-year to $28.8 billion. For all of 2024, the cloud business brought Amazon $107.6 billion in sales and about $39.8 billion in operating profit, accounting for the lion’s share of the company’s profit. Although AWS’s growth rate has slowed slightly compared to the peaks of previous years, the service is still expanding at a double-digit rate. For comparison, its closest competitor Google Cloud grew by 30% in the fourth quarter, but its revenue ( $12 billion per quarter) is significantly smaller. AWS has a strong position due to its scale, extensive ecosystem of services, and efforts in the field of AI: Amazon is actively introducing generative AI into the cloud, as well as investing in its chips and models to improve the efficiency of AWS.
E-commerce has historically been Amazon’s core business. After rapid growth during the pandemic years of 2020–2021, online retail has entered a more moderate phase. Nevertheless, Amazon’s online stores increased sales by 7% in Q4 2024, showing that demand remains high. The company successfully maintains its leadership in e-commerce: the scale of logistics and the Prime program creates high barriers for competitors. An important factor is a shift in focus from its sales to the marketplace: revenues from third-party sellers are growing at an accelerated pace (about +10% at the end of 2024, taking into account currency fluctuations), which increases the marginality of the retail segment since commissions from sellers and fees for warehouse maintenance generate profit without the need to own the goods themselves. In addition, Amazon optimized expenses, reducing costs and increasing delivery efficiency, which had a positive impact on the operating profit of the North American retail division.
The advertising business is a fast-growing and highly profitable segment. Amazon has become a major player in the digital advertising market: quarterly advertising revenue reached $17.3 billion in Q4 2024. This is ~20% more than a year earlier, and almost three times higher than three years ago. Advertising revenue comes mainly from sellers and brands placing ads on the Amazon platform (product search, banners, videos on Amazon Prime, etc.). Thanks to a huge customer base and user behavior data, Amazon competes with Google and Meta for advertising budgets. Advertising has already become Amazon’s third-largest source of revenue and significantly supports profits (the advertising business margin is high). Analysts note that Amazon’s transition to a model with a large share of AWS and advertising structurally increases the company’s profitability in the long term.
Conclusion
Amazon entered 2025 in great shape, confirming its status as one of the most attractive companies in the tech sector. A combination of factors – sustainable revenue growth, multiple profit growth, diversified businesses in the cloud, e-commerce, and advertising, as well as active participation in promising trends (cloud technologies, AI) – distinguishes Amazon from its competitors. Fundamental analysis shows that Amazon’s business has become more profitable and efficient than in previous years, with continued growth potential. Even after a significant increase in quotes in 2024, Amazon shares look justifiably valued relative to its prospects. For investors and analysts evaluating tech stocks, all of these factors point to why Amazon remains so attractive.
In other words, those interested in Amazon stock trading should take a closer look at Amazon: the company confidently leads in key segments and backs up its growth with strong financial results – and these are exactly the indicators that are looked for in the tech stock market.
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