Amazon made Goldman Sachs’ list of its top Internet stock picks for 2018

Story highlights Amazon could deliver huge returns in the next five years, says Goldman Sachs. The e-commerce giant is benefiting from a number of incredible business trends, such as consumer demand for all-in-one devices…

Amazon made Goldman Sachs' list of its top Internet stock picks for 2018

Story highlights Amazon could deliver huge returns in the next five years, says Goldman Sachs.

The e-commerce giant is benefiting from a number of incredible business trends, such as consumer demand for all-in-one devices and home automation.

Goldman Sachs’ (GS) top 2018 Internet stock pick is e-commerce leader Amazon (AMZN).

This marks the bank’s second pick in a row, after Amazon became its top internet stock pick for 2018 back in March. And while the company’s stock is down by about 15% year to date, GS analysts think it has some serious upside ahead, as the internet giant benefits from a number of exciting business trends.

Amazon has been around for nearly 25 years and was recently named as the most valuable brand in the world. The company recently introduced its own line of Alexa-enabled devices and connected home devices like the Echo Look camera and Fire TV Stick, Amazon’s first smart speakers.

It’s not just Alexa devices Amazon is investing in. It is also focusing on its business selling everyday essentials through its AmazonFresh grocery delivery service.

Goldman Sachs says this trend of offering on-demand and “one-stop shopping” is helping Amazon to grow, and it could create new growth for it. Amazon is the second-largest U.S. grocery retailer, but its leadership has done a fantastic job in terms of “land war” in this market, analysts say. This is because the grocery sector is very fragmented and recent research suggests it would take hundreds of more stores and market share to take market share from any one food retailer. It’s worth noting that most grocery transactions are still by in-store.

Goldman Sachs also says there is evidence that Amazon is poised to disrupt yet another sector. The digital retailer is providing an important boost to other Internet stocks and e-commerce shares. For example, Amazon is one of the largest online retailers and eBay has been pulling in more and more buyers on its marketplace. Now, though, Goldman Sachs notes that Amazon is a “bigger force” in this sector.

Other categories that Goldman Sachs thinks could be huge for Amazon include Amazon Music and voice search. Amazon, as many know, has already teamed up with Google (GOOGL) to create a long-term digital music licensing partnership.

When it comes to investing in Amazon, Goldman Sachs predicts stocks that offer exposure to e-commerce and cloud are its most attractive. Amazon has a huge market cap of nearly $885 billion.

It’s not just tech shares that Goldman Sachs calls out for their huge potential to generate high returns over the next five years. While not a tech-specific stock, hotel owner Choice Hotels International (CHH) is a favorite for the holiday season. Last month, it was Goldman Sachs’ top pick for its $5.1 billion in gains over the next year. That might not seem impressive, considering the S&P 500 was up 21% year to date, but Goldman Sachs notes that Choice Hotels has one of the fastest-growing restaurant check growth rate in the industry. In addition, the firm says it offers room rates that are relatively flat over last year.

To sum it up, Amazon investors should consider investing in its next five years. The company is one of Goldman Sachs’ five most attractive long-term growth ideas in the Internet sector.

You can see Goldman Sachs’ whole list of top picks for internet-related stocks on its website.

Leave a Comment