I've Been Wrong About Amazon Stock for Almost 10 Years. Here's Why I'm Finally Changing My Mind.
2026-08-06 07:15
•Micah Zimmerman •The Motley Fool
•••••• •••••• Axe Cap view
Changing Tune on Amazon After a Decade in the Cold
A veteran investor flips bullish on Amazon, seeing its Amazon Web Services and advertising arms as game changers.
For years, I avoided Amazon because I'd written off its retail chops as too costly, with razor-thin margins that didn't justify the stock price. But that's changing. The cloud unit, AWS, now rakes in hefty profits with software-like margins, funding further ventures without burning cash. Meanwhile, advertising revenue has taken off, surpassing $60 billion annually and growing around 20% a year. This isn't your dad’s Amazon. The old perception of a cash-draining logistics network is outdated; instead, it’s a competitive moat that keeps others at bay. For South African investors, this shift means a rethink on how tech giants with diversified income streams can weather volatility. That said, Amazon’s heavy spending on logistics and the risk of tougher regulations could still upend the narrative. I'm upgrading my view but watching costs closely. this is just our opinion and not financial advice
Trim existing exposure in local tech proxies like Naspers and Prosus cautiously, as they share some e-commerce traits but lack Amazon’s cloud scale. Consider a small hedge via USD/ZAR as a proxy for US tech exposure. Wait for clearer signs on AWS profitability trends before adding aggressively.
- USD/ZAR
- Naspers
- Prosus
- Amazon’s capital-intensive logistics spending might balloon
- Regulatory crackdowns on big tech could limit growth
6/10
After a decade of avoiding Amazon, the author reversed his stance after recognizing the company's business model has fundamentally shifted. AWS and advertising now generate the majority of profits with software-like margins, while the logistics network serves as a competitive moat rather than a cost burden. The diversified profit streams justify Amazon as a long-term core holding despite ongoing risks from capital spending and regulation.
Our take is based on reporting first published by The Motley Fool.