How to buy Amazon stock (AMZN)
Updated: August 28, 2024
Amazon innovated e-commerce with online shopping and free two-day shipping for members. The company also led the cloud computing boom with Amazon Web Services (AWS). The company recorded $574.8 billion in net sales in 2023 and a $30.4 billion profit¹. While AWS and online marketplace sales make up most of the total sales, Amazon also generates revenue from Whole Foods, advertising, Twitch, Amazon Prime Video and other income streams. This guide will reveal how to buy Amazon stock and provide an analysis so you can decide if Amazon stock is right for you.
How to buy Amazon stock
Investors who buy Amazon stock can benefit from the company’s long-term growth. If you’re not sure how to buy Amazon stock, these steps will help.
- 1.
Open a brokerage account: You need a brokerage account to buy and sell stocks, including Amazon. Comparing multiple brokerage accounts will help you find the right one for your finances. It only takes a few minutes to set up an account at most firms. You will have to provide personal information like your name, email address and Social Security Number during the application process.
- 2.
Open an order ticket: The process of buying and selling a stock always starts with an order ticket. Many brokerage firms have straightforward dashboards that make it easy to create these tickets. You can choose between a market order or a limit order. Market orders are executed at the current price, while limit orders are executed at the price point that you designate. Those orders will not go through if Amazon stock doesn’t reach your desired price point.
- 3.
Specify Amazon stock: You can type “AMZN” into your order ticket to specify Amazon stock. Some brokerage firms let you provide the company’s name instead of the ticker, but it’s good to know a stock’s ticker symbol. The order ticket will then display Amazon’s current price. Investors can refresh their order tickets to see the updated price of Amazon stock.
- 4.
Decide on the number of shares: Each order ticket requests that you specify how many shares of Amazon stock you want to buy. Most brokerage firms let you buy fractional shares if you do not have enough cash to buy an entire share. For instance, you can buy 0.5 shares of Amazon instead of an entire share if you want to gradually build a position.
- 5.
Execute the order: After reviewing your order ticket, you can submit the order. If you placed a market order, you should see Amazon stock in your portfolio if you refresh the page. Limit orders may take more time to go through if it takes a while for Amazon to reach your desired price point. You can cancel a limit order before a stock reaches the designated price per share or keep your limit order open.
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About Amazon
Amazon was founded in 1994 and started as an online bookstore before expanding into the tech giant that it is today. The Seattle-based company is the leader in the e-commerce and cloud computing industries. It also has exposure to other verticals, such as advertising, streaming, groceries and gaming. The company has a long history of reinvesting profits into its business² and acquiring other companies so it can gain market share and minimize its tax burden.
Is Amazon a good stock to buy?
Amazon has outperformed the S&P 500 over the past five years but lags the Nasdaq Composite during the same stretch. The tech giant has higher year-to-date returns than many e-commerce platforms, such as Shopify, Alibaba and eBay.
However, Amazon hasn’t kept up with fellow cloud computing leaders Microsoft and Alphabet over the past five years. Amazon has almost doubled during that time while Microsoft and Alphabet have five-year gains of 207%³ and 180%⁴, respectively.
Amazon’s collection of brands has made it a recession-resistant stock. People will continue to buy products online and visit Whole Foods to buy groceries in any economy. Many businesses will also continue to invest in Amazon Web Services even if the economy endures a downturn. Consumers seeking entertainment options may turn to Amazon Prime Video for exclusive content.
The tech giant also stands to benefit from artificial intelligence, which will increase demand for Amazon Web Services. Artificial intelligence can also enhance Amazon’s online marketplace and drive more sales.
Shares have almost doubled over the past five years and present a buying opportunity for long-term investors. Most Wall Street analysts are bullish on the stock and have given it a Strong Buy rating⁵.
Pros and cons of buying Amazon stock
Pros
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Amazon is a leader in e-commerce and cloud computing
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The company regularly invests profits back into the business and makes acquisitions
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Amazon has outperformed the S&P 500 over the past five years
Cons
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Government scrutiny and regulations can hamper Amazon’s growth and limit its ability to make big acquisitions
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Amazon has underperformed the Nasdaq Composite over the past five years
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Competitors are gaining ground in cloud computing, AI and other industries
Here’s how to invest in Amazon stock
Buying Amazon stock can result in steady returns for long-term investors. Each stock transaction starts with a brokerage firm, and if you’re still on the fence, these are some of the top brokerage firms to consider.
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Interactive Brokers offers low trading fees and robust trading tools — major assets to day traders and other DIY investors. Lower-volume traders will also appreciate that they can access commission-free trading through the IBKR Lite plan.
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Marc Guberti is a certified personal finance counselor and a freelance writer who resides in Scarsdale, New York. His work has been featured in US News & World Report, Newsweek, InvestorPlace, and other publications.
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