Amazon’s Retail Engine May Matter More Than AWS Right Now

By Douglas A. McIntyre Published Dec 20, 6:23AM EST

Quick Read

Amazon (NASDAQ: AMZN) is positioned for a strong holiday quarter driven primarily by its core e-commerce business.
The stock’s underperformance this year has reset expectations and improved near-term risk-reward.
Amazon’s scale, third-party marketplace leverage, and logistics dominance provide earnings durability even if AWS growth cools.

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Amazon’s Retail Engine May Matter More Than AWS Right Now — © 24/7 Wall St

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Why Amazon stands out this quarter

I started the conversation by saying that one of my favorite retail stocks right now is Amazon. This is not an AI call and it is not an AWS hype trade. It is about the holiday quarter. Amazon’s e-commerce platform is built to capture peak consumer demand, with massive scale, pricing leverage, and millions of third-party sellers operating inside its ecosystem.

Lower expectations help

Lee pointed out that Amazon has underperformed the broader market this year, which matters more than most investors realize. Expectations are no longer stretched. Even a solid, not spectacular, quarter can move the stock if retail margins and volumes come through. Berkshire Hathaway still owns Amazon, making it one of the few major tech names it holds alongside Apple and Alphabet.

AWS is not the swing factor right now

We both agreed that AWS remains a long-term asset, but near-term cloud and AI spending has become more competitive and more capital intensive. That creates the risk of disappointment if investors expect too much too fast. The key point is that Amazon does not need AWS to be a home run this quarter to deliver strong results.

The e-commerce moat still wins

I emphasized that controlling the leading e-commerce platform in the United States and many global markets is an enormous advantage. Amazon benefits regardless of which sellers win during the holidays because it controls fulfillment, advertising, and transaction flow. With expectations reset and retail momentum building, Amazon looks well positioned into year-end.

Transcript:

[00:00:04] Doug McIntyre: So the other company that I love in retail right now is I love Amazon.

[00:00:09] Lee Jackson: Really? Okay. That’s interesting. I, I can see why.

[00:00:13] Doug McIntyre: so I really love Amazon for this quarter, and it’s not just because AWS is gonna do well or they’re gonna say that they’re doing well or doing badly with ai, they will have a very, very good quarter with just the Amazon e-commerce business, similar to Walmart, you know?

[00:00:32] Yep. Lots and lots of leverage. Lot of third parties. Um. You know, b basically host themselves on Amazon. Right. I, I lo I love Amazon for this holiday period.

[00:00:42] Lee Jackson: Well, I do too. And it’s underperformed this year, so Yeah. So, and, and, and Buffet owns some Amazon, so it’s the only other tech stock really that’s in there other than Apple and Google.

[00:00:54] Doug McIntyre: Yeah. And I like the stock particularly because even if AWS isn’t a home run for this, this quarter, uh, e-commerce could be.

[00:01:03] Lee Jackson: Yeah. And, it’s AWS is a home run for the long haul, that’s for sure.

[00:01:08] Doug McIntyre: Yeah. Well, it has been the short haul too, but there it’s one of those, uh, potential disappointments.

[00:01:14] Yeah. In the AI growth they’ve put a lot of money in. So I would look at Amazon as a maybe AWS is now, uh, not as quite as attractive because AI is getting more competitive and it’s expensive. But when you hold the lead in e-commerce in the United States and a bunch of other countries, that’s a good poll position to have.

[00:01:37] Lee Jackson: Yeah, it really is. It really is.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.