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There haven't been many, if any, businesses that have ascended as rapidly as Amazon (NASDAQ: AMZN) has. The company's 2023 revenue of $575 billion was a phenomenal 108 times higher than it was 20 years prior. This is clearly a growth-focused enterprise, even at its current scale.

As of this writing, the e-commerce and cloud computing juggernaut is trading 12% off its all-time high from early July this year. Here's why this creates an excellent opportunity to buy this growth stock .

Financial performance

Amazon has no shortage of growth levers that it will continue to benefit from. Most investors are familiar with the company's monster success in the e-commerce niche. In the U.S., 38% of all spending that happens online goes through Amazon.com.

The rise of streaming entertainment is another tailwind that benefits the business. Amazon Prime is popular because it gives shoppers fast and free shipping. However, consumers also get access to a vast library of shows and movies. In terms of TV viewing time in the U.S., the video service is behind only Alphabet 's YouTube and Netflix . More household cord-cutting will keep the engagement high.

In essence, the advent of the internet and all things digital is the key driving force for this business, which will continue to be the case going forward. This is true with other prominent segments, such as Amazon Web Services (AWS), the leading global cloud computing platform. With a second-quarter operating margin of 35.5%, AWS has been a major profit driver.

Given how much website traffic Amazon.com gets, it's also a budding player in digital advertising, raking in Q2 revenue of $12.8 billion in this area. That's up 20% from the year-ago period. According to Insider Intelligence, Amazon is stealing share from the heavyweights that are Alphabet and Meta Platforms .

Amazon has historically been known for its impressive top-line growth. But investors can now get excited about its improving profitability. CEO Andy Jassy and his team have been focused on cutting expenses since 2022, laying off tens of thousands of people and working to reduce what critics thought was a bloated cost structure.

Operating income almost doubled last quarter to $14.7 billion. Credit goes to sales and marketing and general and administrating expenses that were down on a year-over-year basis.

Amazon's valuation

There's no question that Amazon is one of the most closely followed companies on planet Earth. Everyone knows what a dominant enterprise it is. But the stock isn't expensive by any means.

Shares trade at a price-to-sales ratio of 3.1. This represents a discount to its trailing five- and 10-year averages. This looks like a very reasonable entry point for prospective investors.

According to Wall Street consensus analyst estimates, Amazon is projected to increase revenue and earnings per share at compound annual rates of 11% and 37%, respectively, between 2023 and 2026. It's always a good idea to take these forecasts with a grain of salt, but that type of upbeat outlook is very encouraging.

Besides financial upside, Amazon has many powerful competitive strengths. It possesses valuable intangible assets, like its highly regarded brand, as well as the treasure trove of data it is able to collect. The online marketplace benefits from network effects . Amazon's customers, whether merchants or AWS clients, undoubtedly have switching costs if they decide to use another service. Given the company's massive scale, it certainly has cost advantages across the board, especially with its logistics operations.

Don't overthink it. Amazon is a no-brainer growth stock to buy right now on the dip.

Before you buy stock in Amazon, consider this: