Could This Bull Market Buy Help You Become a Millionaire?
What sort of stock makes a top bull market buy? Well, the company should have a solid track record of earnings growth and share price performance, operate in a high-growth market, and offer promising prospects well into the future. This sort of stock may have already driven the gains of at least one benchmark index such as the S&P 500. Bull markets generally favor growth companies, which often flourish during periods of expansion.
One particular player that fits the bill is a company many of us know well because it sells us everything from groceries and essentials to general merchandise -- and delivers it all right to our door. I'm talking about Amazon (NASDAQ: AMZN). The company is a leader in the growth market of e-commerce, but its dominance doesn't stop there. Amazon, through Amazon Web Services (AWS), is also the top player in cloud computing, a business that's actually driving overall profit at the company.
All of this is great. But could this bull market buy help you become a millionaire? Let's find out.
What lies ahead for Amazon
First, let's talk about Amazon's recent past and what lies ahead. This e-commerce giant thrived in the earlier days of the pandemic as people favored shopping from their armchairs -- in fact, Amazon even doubled its fulfillment network to prepare for more and more demand.
However, the following couple of years proved difficult as inflation raged higher, hurting Amazon's costs and shoppers' buying power. That led Amazon to report an annual loss in 2022, but this market giant rapidly took steps to turn things around. The company revamped its cost structure, boosted investments in technology infrastructure to support AWS expansion, and put a focus on the explosive-growth area of artificial intelligence (AI).
These efforts quickly bore fruit, with Amazon reporting a double-digit increase in net sales last year and a net income of more than $30 billion. And trends at AWS have gradually improved, with customers shifting from cost-cutting to deploying new projects. In the most recent quarter, AWS net sales rose 13% and operating income climbed 38%.
On top of this, Amazon's focus on AI is helping the company streamline its own processes and achieve cost savings -- and grow revenue through the AI services AWS offers to customers. For example, Amazon uses AI to help it determine delivery routes, and the most efficient delivery routes lower the company's cost to serve.
As for AWS, customers can find the solution to most of their AI needs there, from the latest chips from leading supplier Nvidia to a fully managed service that offers them top large language models (LLMs) to customize for their own use. AWS' position as the world's leading cloud company could help it win in AI over time because it already has access to a huge audience of potential AI customers -- its current AWS customers.
A trillion-dollar market
AI could be on the path to transforming many industries, from healthcare to automotive, and the entire AI market is forecast to reach more than $1 trillion by the end of this decade -- so Amazon's investment here could result in major growth down the road.
Now, let's get back to our question. Could Amazon help you become a millionaire? Of course, it's unlikely that an investment in only one stock -- even a very promising one -- will make you rich. For example, if you invested $10,000 in Amazon today and the stock triples, you're looking at a value of $30,000 -- a great outcome, but far from a million dollars.
Instead, it's a great idea to choose the more reliable path to riches, which involves investing in a variety of stocks over the long term. This means building a portfolio of 25 stocks or more and holding on for about a decade. Don't worry -- you don't have to buy this many stocks right away. You should gradually build your portfolio according to your budget and as opportunities arise. Since investing is a lifetime pursuit, time is on your side.
And as part of this strategy, Amazon could be a bull-market buy today that may help your portfolio become a million-dollar one.
Should you invest $1,000 in Amazon right now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
Could This Bull Market Buy Help You Become a Millionaire? was originally published by The Motley Fool
