What Is One of the Best Stocks to Buy and Hold for 10 Years?
Key Points
Amazon is pursuing some exciting opportunities across AI and satellite internet services.
Robotics remains one of the company's biggest opportunities, and it's not reflected in the stock's valuation.
CEO Andy Jassy hasn't ruled out potentially selling robotics solutions to other customers, which could unlock another major revenue stream.
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Amazon (NASDAQ: AMZN) just released its first-quarter earnings results. CEO Andy Jassy stated, "We're in the middle of some of the biggest inflections of our lifetime."
The company's revenue accelerated to 17% year over year, led by higher growth in Amazon Web Services (AWS). Amazon has a lot going on, including launching a satellite internet service and meeting insatiable demand for artificial intelligence (AI) compute in AWS.
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But the single biggest opportunity may be in robotics.
Image source: Getty Images.
In the annual shareholder letter, Jassy called robotics a "step-level change" in how Amazon operates. For a company with $742 billion in annual revenue, investors should take that statement seriously.
Nvidia CEO Jensen Huang has said robots are likely to be the next multitrillion-dollar industry. Since Amazon acquired Kiva Systems in 2012, it has deployed over 1 million robots across its fulfillment centers.
"While the above progress is substantial, we're still in the early stages of how we'll leverage robotics," Jassy said. He added that management is open to exploring the development of robotics solutions for other industrial and even individual customers. This would undoubtedly unlock another multibillion-dollar business for Amazon over the next decade.
It's not like Amazon needs to start a new business line to benefit from robotics. It has already helped Amazon significantly reduce e-commerce costs. Amazon's trailing-12-month cash from operations, or operating cash flow, has skyrocketed since 2022, and grew 30% year over year in the first quarter.
This means Amazon is increasingly unlocking value for shareholders through AI and robotics. These technologies will naturally lead to new opportunities in 10 years that investors cannot fully comprehend or value right now -- meaning the stock is more likely than not undervalued.
Despite strong cash-flow growth, Amazon stock still trades just under 20 times trailing cash from operations per share. That valuation leaves room for attractive compounding gains over the long term.
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John Ballard has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
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