It’s hardly two months into 2020, and Amazon.com Inc. (NASDAQ:AMZN) is already lining up for what will be an exceptional year. The company’s shares have gained 14% year-to-date ahead of the S&P 500’s 4% gains.
Exceptional Q4 earnings results
In Q4, Amazon beat estimates on profits and sales with its bottom line growing even after they rolled one-day Prime delivery that could add $1.5 billion in shipping expenses. The one-day delivery will enable the company to differentiate for competitors such as Walmart (NYSE: WMT) that already have free two-day delivery. Also, the one-day delivery helped increase Prime membership to 150 million.
Amazon saw its shipping costs increased by 43% to around 12.9 billion, but growth in the AWS segment helped counteract the narrow gains in e-commerce. This helped boost profits to $6.47 per share for $6.04 per share.
Equally, the company’s valuation has kept growing, and it is currently the most valuable company globally ahead of the likes of Microsoft Corp (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL) and Apple Inc. (NASDAQ: AAPL). In the past year, Microsoft and Apple rallied, taking their valuations to around $1.4 trillion compared to Amazon’s $1.06 trillion.
The e-commerce giant has a chance to catch up with these tech giants because of profits from its high-margin segments such as AWS and advertising. If the company continues executing well, it has a chance of taking the stock even higher.
Staying ahead of rivals
Also, the company has maintained a competitive edge against rivals such as Walmart in e-commerce services. Walmart has, for instance, halted its digital acquisition brands like Bonobos, which shows that it is slowing in its e-commerce plan.
Recently Amazon won a court case challenging the award of the $10 billion JEDI contract to Microsoft. This is after a judge put a stop to all work on the project until the legal issue is resolved. Initially, Amazon was the favorite to win the project, so they might consider the ruling a step towards winning.
The company has also positioned itself in emerging industries through Alexa and Fire TV devices.