Is Amazon the Smartest Growth Stock to Buy in April With $2,000?

Amazon (NASDAQ: AMZN) is a dominant technology-driven enterprise that has customers all across the globe. It got here thanks to fantastic growth. Between 2014 and 2024, the company's revenue increased at a compound annual rate of 22%. This rapid ascent has made Amazon one of the world's most valuable businesses.

Viewing things with a fresh perspective today, with an eye toward the future, you might be wondering if the company can continue on its impressive trajectory. There are reasons to remain bullish. Here's why Amazon is the smartest growth stock to buy in April with $2,000.

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Massive end markets

If a company is lucky, it'll benefit from one secular trend. Amazon stands out because it has multiple tailwinds working in its favor. Additionally, the business operates in massive global end markets.

Take the e-commerce sector. Almost 40% of all spending online in the U.S. goes through amazon.com. Given that Grand View Research estimates the worldwide retail e-commerce market to grow at a nearly 12% annualized rate from its already large size of $6 trillion, Amazon is set to capture a lot of this opportunity.

Cloud computing is another important area. Amazon Web Services (AWS) posted 19% sales growth in Q4, with a stellar 37% operating margin. It's the industry leader with the most market share. And according to Grand View Research, the global market is worth about $800 billion today and will be worth much more in the future.

There's also digital advertising, a booming money-maker. In 2024, Amazon raked in more than $17 billion in revenue (up 18% year over year), which is surely generating a high margin. Only Alphabet and Meta Platforms have a bigger presence in digital advertising.

Combined, these industries are valued in the trillions of dollars. This gives Amazon plenty of opportunity to drive growth.

What about artificial intelligence?

Another secular trend that has come up in recent years is artificial intelligence (AI). Amazon has already been using AI capabilities throughout its business. For example, the online marketplace uses AI for personalized shopping recommendations. Prime Video uses AI to suggest shows and movies to watch. Alexa also leans on AI to process commands and respond accordingly.

Looking ahead, AI is and will continue to play a more pronounced role for the company, particularly within AWS. AWS offers a broad suite of AI tools and services for clients, like Bedrock for building generative AI apps, Translate for language translation, and Kendra for search functionality.

Amazon is planning to spend $100 billion on capital expenditures in 2025. "The vast majority of that capex spend is on AI for AWS," CEO Andy Jassy said on the Q4 2024 earnings call. He went on to declare that AI "is one of these once-in-a-lifetime type of business opportunities."

Durable growth

Investors gravitate to the fastest-growing companies. Maybe it's because they are the easiest to spot. And for sure it's because they believe they can generate huge returns over time by owning them.

Instead of focusing on how rapid the gains are, perhaps it's a better idea to look for durable growth. These are businesses that should see revenue increase at a much faster clip than GDP over an extended period of time, not just for a few years before fizzling out. While Amazon was an unbelievably fast grower in its early years, it has now transformed into registering healthy expansion.

Having multiple powerful secular trends working in its favor is helpful. What's more, Amazon's wide economic moat, supported by its brand, switching costs, network effects, and cost advantage, substantially decreases the chances the business ever gets disrupted.

These factors make it the smartest growth stock to buy with $2,000, in my opinion. As of April 21, the shares trade at a price-to-sales ratio of 2.9. This is very reasonable for such a dominant enterprise.

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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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.