Nasdaq Sell-Off: Buy This Unstoppable Stock at a Discount

There's uncertainty in the market right now as investors try to determine how much President Donald Trump's tariffs on imports will affect the U.S. economy. Judging by the market's recent sell-off, they're not overly optimistic.

But the pullback in the tech-heavy Nasdaq Composite is opening a buying opportunity for some companies. Amazon (NASDAQ: AMZN) may be a perfect example. The company is a clear leader in e-commerce and cloud computing, while also expanding its footprint in artificial intelligence (AI) and advertising. Yet, amid the sell-off, Amazon's stock is down 11%.

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Here are three reasons investors should consider snatching up Amazon shares right now.

Image source: Getty Images.

Reason 1: Amazon is benefiting from artificial intelligence cloud computing

Companies tied to artificial intelligence data centers, like Nvidia and Broadcom, rightfully get a lot of attention these days. Their processors are fueling a massive AI boom, but cloud computing is also a significant part of the growing AI market.

Goldman Sachs estimates global AI cloud sales will reach $2 trillion over the next five years, and Amazon is perfectly poised to tap into its growth. The company holds 31% of the cloud computing market in the U.S., ahead of Microsoft and Alphabet, and Amazon Web Services (AWS) earned $39.8 billion in operating income in 2024, a 62% increase from the prior year.

While competition is heating up in AI cloud services, Amazon's dominant position in the cloud market gives it a huge advantage over smaller rivals trying to carve their own space. As more companies move to AI-powered cloud services, expect Amazon to benefit from its leading spot in the cloud space.

Reason 2: Amazon's core businesses are humming along nicely

It's not just AI cloud computing that investors should note. Amazon's e-commerce and advertising businesses are also performing well.

Amazon's fourth-quarter North American operating income was impressive, rising 43% to $9.3 billion. Amazon's e-commerce business holds 40% of the U.S. market, far ahead of Walmart's 7%. And there could be expansion room as e-commerce sales will account for just 20% of all retail sales in the U.S. by 2028, giving Amazon's marketplace more opportunities.

Additionally, investors shouldn't overlook Amazon's advertising business. Ad sales rose 18% in the fourth quarter to $17.3 billion and the company is on track to grab 15% of the digital ad market this year. Management estimates its ad revenue will have an annual run rate of $69 billion this year, a massive increase from just $29 billion four years ago.

Reason 3: Amazon's shares are relatively well priced

With a forward price-to-earnings multiple of about 29, compared to the S&P 500's 22, Amazon isn't exactly inexpensive. Still, the recent pullback of the company's share price made the stock far cheaper than it's been in the recent past. Consider that just three months ago Amazon's stock had a forward P/E of 45, far above the broader market.

The bottom line is that nothing has changed with Amazon's businesses or opportunities, and yet its stock is much less expensive. That means investors can pick up this dominant tech stock at a discount.

Keep this in mind during market volatility

During periods of market volatility, it can be tempting to follow the crowd and hit the panic button. You might even be tempted to sell stocks you previously had strong convictions about.

If you already own Amazon, take a few minutes to think about why you bought it in the first place and then ask yourself if anything has changed with the company since then that would cause you to lose faith in the stock. If not, then it's probably best to hold onto your position, or even add to it.

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*Stock Advisor returns as of March 10, 2025

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. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Goldman Sachs Group, Microsoft, Nvidia, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.