Amazon.com, Inc. (NASDAQ:AMZN) is one of the Top 10 Stocks to Buy According to Lakehouse Capital. Morningstar opines that, over the long term, it anticipates e-commerce to continue to take share from brick-and-mortar retailers. Furthermore, the firm believes Amazon.com, Inc. (NASDAQ:AMZN) to gain share online. As per the firm, Amazon.com, Inc. (NASDAQ:AMZN)’s retail business enjoys a wide moat, which stems from network effects related to its marketplace, a cost advantage associated with the purchasing power, logistics, vertical integration, a negative cash conversion cycle, and intangible assets related to technology and branding.
A customer entering an internet retail store, illustrating the convenience of online shopping.
The traditional retailers have significantly invested in technology to keep pace. Considering Amazon.com, Inc. (NASDAQ:AMZN)’s technological prowess, huge scale, and relationship with consumers, Morningstar believes that the company widened its lead, which can result in economic returns well in excess of its cost of capital. Morningstar also opines that AWS has a wide moat, stemming from increased customer switching costs, cost advantage related to the economies of scale, intangible assets coming from semiconductor and facility development. Notably, Amazon Prime memberships tend to attract and retain customers who spend more with Amazon.com, Inc. (NASDAQ:AMZN). This helps create a powerful network effect while, at the same time, bringing recurring and high-margin revenue.
Lakehouse Capital, a Sydney-based investment manager, released its May 2025 investor letter. Here is what the fund said:
“Amazon.com, Inc. (NASDAQ:AMZN) reported a solid quarterly result with net sales up 9% year-on-year (10% in constant currency terms) to $155.7 billion and operating profit up 20% to $18.4 billion. The company’s core e-commerce business remained resilient in the face of potential tariffs, with management noting they hadn’t seen any material change in consumer buying behaviour as at the end of April. Amazon web services (AWS) grew 17% to $29.3 billion which was a slight deceleration from the 19% delivered last quarter. Whilst this seems disappointing at first blush, management reiterated that demand is very strong they are still capacity constrained. Artificial intelligence (AI) continues to be a key growth driver with AI workloads growing in excess of 100% year-on-year on AWS. Overall, it was a positive result, and we remain confident that the company is set to deliver many years of solid revenue growth and margin expansion.”
