1 Growth Stock Down 20% to Buy Right Now

Although the market has bounced back since early April, there is still significant uncertainty regarding the state of tariffs and the economy. Amidst the turmoil, investors will find that some of the most dominant businesses are taking a hit.

It's time to take a closer look at potential opportunities that the market could be presenting. As of this writing, there's one growth stock that's trading 20% below its all-time high from February. It has no shortage of positive attributes investors can focus on. Here's why you should buy the dip right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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Thinking about tariffs

Given that it generated $57.4 billion in net sales from its online stores, investors are correct to worry about Amazon (NASDAQ: AMZN) as it relates to tariffs. However, this is still a smart stock to scoop up.

As things stand right now, there is a 145% tariff placed on goods imported into the U.S. from China. Many sellers that have storefronts on amazon.com would be hurt by this. To offset higher costs, some are raising prices for their goods. They're even reducing ad spending on the site. Moreover, Haul, an Amazon service that focus on extremely cheap items, would also be impacted.

Amazon CEO Andy Jassy isn't overlooking the tariff situation. He also understands how fluids things are. In the end, the ultimate setup could be much different than what we're seeing today.

He also points to Amazon's strength in selling essential goods, things that consumers need no matter what the economic backdrop looks like. The business is also a top seller of groceries.

"When you have the broadest selection like we do and 2 million-plus global sellers like we do, you're better positioned to help customers find whatever items matter to them at lower price points than elsewhere," Jassy highlighted on the Q1 2025 earnings call.

More growth tailwinds

Online shopping remains key to Amazon's success. And it's easy to see this continue to grow in the years ahead. In the U.S., only 16.4% of all retail sales are represented by e-commerce, so there is still a sizable runway to take share.

Besides online shopping, Amazon is positioned well to benefit from other powerful trends shaping the economy. One area is digital advertising. This is a booming segment, posting revenue growth of 19% in Q1, now raking in annual run-rate sales of $55.7 billion.

Investors seem to always have their attention on Amazon Web Services (AWS), which registered a stellar 39.5% operating margin in the first quarter. Jassy said that 85% of worldwide IT spending remains on-premises, demonstrating just how much opportunity there is for cloud services provides, especially the industry leader AWS.

Growing interest in artificial intelligence (AI) will also keep providing a boost, as AWS can be a mission-critical platform for companies looking to build with this revolutionary technology. Amazon invested more than $24 billion in capital expenditures (capex) in the last three months to stay ahead of the curve.

"It primarily relates to AWS as we invest to support demand for our AI services and increasingly in custom silicon like Trainium, as well as tech infrastructure to support our North America and international segments," CFO Brian Olsavsky said on the Q1 2025 earnings call about capex spending.

Hard to pass up

With Amazon shares 20% off their record, investors are presented with the chance to buy a world-leading enterprise at a compelling valuation. While the rest of the market panics, it pays to be level-headed.

The stock trades at a price-to-earnings ratio of 31.3. Given Amazon's growth tailwinds and coupled with the fact that the analyst community thinks earnings per share will rise at a compound yearly rate of 17.4% between 2024 and 2027, this looks like a great buying opportunity for long-term investors.

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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. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.