Derius Hopkins
Purdue University Global
FI499 Bachelor’s Capstone in Finance
Dr. Ernesto Escobedo
6-06-23
Stock market
I choose to compare Amazon with the Dow Jones Industrial Average and discuss how the two are performing in the stock market. The Dow Jones Industrial Average seems to perform better than Amazon, having been in the market for 125 years. The Dow Jones Industrial Average is one of the most widely recognized stock market indexes in the world. Unlike Amazon, The Dow Jones Industrial Average is a fluid index. This means that they can substitute companies that are performing poorly with the potential ones to maintain the market share. I feel like the Dow Jones Industrial Average stock market is saturated, and therefore, I would prefer investing in Amazon.
I believe Amazon stock is attractive to foreign investors, because of the following reasons. First, it dominates a huge market share. Amazon is one of the companies that have invested highly in the cloud computing business. This platform has enabled the company to dominate the market, taking about 34% of the market share and growing its stock to $369 billion (Talha, Sohail & Hajji, 2020). Cloud computing has enabled Amazon to sustain itself during the tough economic times, meaning that investors can buy its stock because it's likely to continue to grow.
The second reason is that Amazon is one of the leading market shares in e-commerce. The Covid-19 pandemic was a disaster for many companies, whereby their stock decreased and no one was willing to invest. However, it was different in Amazon because it registered a 7% increase in its online stores' revenue. This is because more merchants choose Amazon's marketplace to sell their products. This shows how the company is thriving in a hard time and every foreign investor should buy its stock because the e-commerce business is promising.
The third reason is the growth in digital advertising. The company has faced stiff completion from international companies providing digital advertising services. For example, Alphabet and Meta. However, the company has managed to turn the tables and dominate the market from 2019 to date. Oxford Analytica (2022) found that Amazon's market share in digital ads increased from 7.8% to 13.3% and is expected to rise to 14.6% in 2023. The global digital advertising market is expected to rise to approximately $800 billion by 2026 and Amazon is already registering huge profits. This platform has created a conducive working environment for Amazon, despite the economic downturns. Foreign investors have an opportunity of enjoying the same by buying Amazon stock.
Talha, M., Sohail, M., & Hajji, H. (2020). Analysis of research on Amazon AWS cloud computing seller data security. International Journal of Research in Engineering Innovation, 4(3), 131-136.