Portfolio Manager Sonu Kalra of Fidelity Management & Research Company says a big trend right now is the penetration of e-commerce, with Amazon.com, Inc. (AMZN) being the lead player. He says Amazon has done a phenomenal job of building their e-commerce platform over time.
“I think we are getting to a point where customers are becoming accustomed to buying on Amazon, and knowing that they are going to get a fair price and have the convenience of having those products delivered to their homes in a timely manner. That is the e-commerce portion of the business,” Kalra says.
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Kalra says another big business for AMZN is Amazon Web Services, where they provide IT infrastructure as a service to many companies around the world. With these two businesses together, Kalra says Amazon has the potential to generate significant amounts of free cash flow.
“Over the past year, Amazon has had more of a focus on improving profitability, and investors have become more comfortable with their profit model and gaining confidence that they can make money in the future. I think some of the doubts in their ability to make profits have been put to rest with some of the results that we’ve seen this year,” Kalra says.
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