Legendary investor Peter Lynch championed the idea of buying what you know. His premise was that investing in companies that you understand and are familiar with helps you to better estimate their growth prospects.
That's one reason why I really like Amazon(NASDAQ: AMZN). Like millions of Americans, I use the company's products and services regularly. Not a day goes by when my life doesn't intersect with Amazon in some way.
That doesn't automatically make Amazon's stock a smart pick. However, I emphatically believe it is a smart choice for investors. In fact, I view Amazon as the ultimate growth stock to buy with $1,000 right now.
Image source: Getty Images.
E-commerce, cloud, AI, and more
I just checked my Amazon account. So far in 2025, my wife and I have placed 37 orders on the company's e-commerce platform. That translates to an average of roughly one order every 3 1/2 days. I wouldn't be surprised if we order even more from Amazon in the future. And we almost certainly won't be alone.
Amazon CEO Andy Jassy said in October 2024 that his company only claims around 1% of the global retail market. He added, "And still, about 80% to 85% of that market segment share lives in physical stores. And so, if you believe that equation is going to flip in the next 10 to 20 years, which we do, there's just a lot of opportunity not just for us but for several players." I suspect Jassy is right about the big e-commerce opportunity.
I also think he's right about the growth prospects for the cloud services market. Jassy stated in Amazon's most recent quarterly earnings call, "It's useful to remember that more than 85% of the global IT spend is still on premises, so not in the cloud yet. It seems pretty straightforward to me that this equation will flip in the next 10 to 20 years." If his prediction is correct, that's another massive opportunity for Amazon Web Services (AWS) -- the world's largest cloud service provider.
Artificial intelligence (AI) presents a massive growth opportunity for Amazon beyond AWS. Agentic AI and possibly artificial general intelligence (AGI) could be game changers for the company.
That's not all. Amazon continues to expand further into healthcare, recently announcing the ability to fill pet medication prescriptions on Amazon Pharmacy. It plans to begin offering internet service worldwide using its Project Kuiper satellites later this year. The company's Zoox should have significant growth prospects in the robotaxi market.
A financial juggernaut
Even with all of these growth pathways, Amazon wouldn't be the ultimate growth stock to buy if it were struggling financially. It isn't struggling, of course. Instead, Amazon is a financial juggernaut.
The company's sales jumped 9% year over year in the first quarter of 2025 to $155.7 billion. AWS sales soared 17% to $29.3 billion. Amazon posted a Q1 profit of $17.1 billion, up more than 64% year over year. It generated free cash flow of $25.9 billion over the 12 months ended March 31, 2025. The e-commerce and cloud services giant reported cash, cash equivalents, and marketable securities at the end of Q1 of nearly $94.6 billion.
Wall Street expects Amazon to deliver revenue of around $694.5 billion this year. Analysts project the company will increase its sales to a whopping $762 billion in 2026. They look for Amazon's earnings growth to accelerate as well.
Take advantage of the pullback
With all of these positives, why is Amazon's share price down by a double-digit percentage year to date? Blame it on the Trump administration's tariffs. Many investors are concerned that the company's business will be negatively impacted by the White House's trade policies.
I agree that tariffs could serve as a headwind for Amazon if higher prices cause consumers to reduce their spending. However, I think this is only a temporary issue for the company. Also, my hunch is that Amazon could weather the storm better than many expect because it's the lowest-price online retailer in the U.S. (and has been for eight consecutive years, according to Profitero.)
Forward-looking investors should take advantage of the pullback in Amazon's share price, in my opinion. This ultimate growth stock might not be available at a discount for too much longer.
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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. Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
