Is AMZN Stock a Buy, Hold or Sell? Here’s My Call. thumbnail

Is AMZN Stock a Buy, Hold or Sell? Here’s My Call.

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With the holiday season about to kick off, it’s time to decide whether to add to, cut back on or hold your position in Amazon (NASDAQ:AMZN) stock. It’s a tough choice to make as inflation remains “sticky” and e-commerce businesses are under pressure. Nonetheless, Amazon is responding with proactive cost-cutting measures, and it makes sense to buy the shares while they’re still cheap.

If 2022 has proved anything, it’s that Amazon isn’t indestructible. The company’s recently released fourth-quarter revenue forecast deeply disappointed Wall Street. As a result, many financial traders promptly sold their Amazon shares.

That was probably a hasty decision, however. Sure, Amazon will have to deal with inflation just like other e-commerce companies, but trimming the fat could make it leaner and more profitable than it’s been in quite a while.

Amazon’s Spending Audit Should Help AMZN Stock Recover

This year’s holiday season will undoubtedly provide Amazon with a revenue bump. However, this might not be enough to combat inflationary headwinds, and Amazon needs to rein in its outlays as soon as possible.

Even though inflation seems to be easing somewhat, it’s still a smart business move for Amazon to conduct an audit of its less lucrative business divisions. With CEO Andy Jassy taking the lead, Amazon is reportedly implementing a review of the company’s money-losing segments.

The e-commerce company had already recently implemented a hiring pause to cut costs. “We anticipate keeping this pause in place for the next few months,” explained Beth Galetti, Amazon’s head of HR.

Moreover, don’t be surprised if Amazon soon makes changes to its Alexa unit. Alexa “had an operating loss of more than $5 billion a year,” the Wall Street Journal reported, so workers in that division might want to start looking elsewhere for employment.

Robots Could Add Efficiency and Reduce Costs

Like it or not, the business world is becoming increasingly automated. During this time of elevated inflation, sometimes big businesses are compelled to deploy robots to do repetitive tasks — and that’s exactly what Amazon’s doing now.

Allow me to introduce you to Sparrow — not a bird, but a warehouse robot that Amazon debuted not long ago. Via the Financial Times, Amazon touts Sparrow as capable of detecting, selecting and handling “individual products in our inventory.”

Amazon’s warehouse workers won’t likely cheer this development. From a business perspective, however, it might be a “necessary evil,” so to speak.

Joe Quinlivan, Amazon’s vice president of global robotics, evidently sees the bright side of Sparrow’s arrival. “Robotics technology enables us to work smarter — not harder — to operate efficiently and safely,” Quinlivan assured. Hopefully, working smarter and more efficiently through robotics will help Amazon contain its costs in 2023.

AMZN Stock Is Definitely a Buy

Amazon certainly won’t win any popularity contests among the company’s warehouse workers right now. The shareholders, on the other hand, should be bullish on Amazon’s proactive retrenchment efforts.

The best-case scenario, then, would be an easing of inflation over the coming months, a robust holiday shopping season and Amazon successfully reducing its expenditures in 2023. None of these events are highly unlikely, so beaten-down AMZN stock is absolutely a buy in my book.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.