The e-commerce market is continuously on an uptrend. The market is highly benefiting from changing consumer preferences, easier access to internet facilities, and widening online marketplaces. Also, new and innovative digital technologies are opening new avenues for the industry.

Given this backdrop, it could be wise to invest in fundamentally strong e-commerce stocks Amazon.com, Inc. (AMZN), Alibaba Group Holding Limited (BABA), and eBay Inc. (EBAY) for potential returns in the long run.

The e-commerce market stands to capitalize on the prevailing trends of online shopping, the increasing number of online marketplaces, and social commerce, and it is positioned for unstoppable growth and expansion. The rising internet penetration, demand for convenience, and evolving consumer preferences have also contributed to the boost.

The number of users in the United States e-commerce market is expected to experience strong growth in the near years. Between 2024 and 2029, the total number is projected to grow to 60 million users, reflecting a robust growth of 21.94%. With each increasing year, the number of users is estimated to reach 333.5 million users, setting a new record in 2029.

This year alone, U.S. online retail sales are projected to reach $1.2 trillion, indicating an estimated increase of $108 billion or 9.8% compared to 2023. The market share of the U.S. e-commerce market is also likely to see a jump to 22.7% by year-end from the share of 21.6% as observed at the end of 2023.

According to IMARC Group, the global e-commerce market is anticipated to total around $183.80 trillion by 2032, exhibiting growth at a noteworthy CAGR of 27.2% during the forecast period (2024-2032). The market is currently driven by growing demands for AI-powered features, expanding cross-border trade opportunities, and innovations of secure digital payment systems.

Given these factors, let’s delve deeper into the fundamentals of top e-commerce stocks: AMZN, BABA, and EBAY.

Amazon.com, Inc. (AMZN)

AMZN engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores internationally. It operates through three segments: North America; International; and Amazon Web Services (AWS).

On October 24, AMZN’s Amazon Web Services and Box, Inc. (BOX), the leading Intelligent Content Management platform, expanded their strategic partnership to empower organizations in building new applications and maximize productivity with generative AI. Box customers can now access foundation models directly in Box AI using Amazon Bedrock, starting with Anthropic’s Claude and Amazon Titan.

The integration allows companies to quickly and securely build generative AI applications by combining some of the world’s most advanced AI models with their data residing in Box’s Intelligent Content Management platform. It helps organizations to quickly get answers, summarize information, generate content, and securely complete tasks.

On October 16, AMZN revealed an entirely new Kindle lineup, which consists of a reimagined Kindle scribe and the first-ever color Kindle. The reimagined Kindle Scribe comes with a paper-like display, offers new writing experiences in books, and a powerful notebook experience. It provides 25% faster page turns and up to three months of battery life.

For the second quarter that ended June 30, 2024, AMZN reported total net sales of $147.98 billion, up 10.1% from the previous year’s quarter. Its operating income grew 91% from the year-ago value to $14.67 billion. Also, the company’s net income and EPS stood at $13.48 billion and $1.26, reflecting growth of 99.8% and 93.8% year-over-year, respectively.

Street expects AMZN’s revenue and EPS for the third quarter (ended September 2024) to increase 9.9% and 21.2% year-over-year to $157.27 billion and $1.14, respectively. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.

Shares of AMZN have surged 4.1% over the past six months and 42% over the past year to close the last trading session at $188.39.

AMAZN’s robust growth prospects are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a B grade for Quality and Sentiment. Within the B-rated Internet industry, AMZN is ranked #15 out of 53 stocks.

Click here to access additional AMZN ratings for Growth, Value, Stability, and Momentum.

Alibaba Group Holding Limited (BABA)

Headquartered in Hangzhou, China, BABA provides technology infrastructure and marketing assistance to merchants, brands, retailers, and other businesses to engage with their customers worldwide. It operates through seven segments: China Commerce; International Commerce; Local Consumer Services; Cainiao; Cloud; Digital Media and Entertainment; Innovation Initiatives and Others.

On September 5, BABA partnered with Mastercard and Cardless to provide a co-branded credit card designed to reward businesses for cross-border and domestic sourcing purchases through Alibaba.com. The Alibaba.com Business Edge Credit Card was created to help small business owners and is its first co-branded U.S. credit card.

Through this partnership, BABA is expanding into an innovative financial solutions segment tailored for small business owners and will empower U.S. businesses by simplifying sourcing and offering valuable rewards.

On the same day, BABA announced its new artificial intelligence (AI)-powered sourcing agent, and new financial and logistics solutions. The solutions will help small and medium-sized enterprises (SMEs) to increase sourcing efficiency and efficiently navigate cross-border trade.

During the first quarter, which ended June 30, 2024, BABA’s revenue increased by 3.9% year-over-year to $33.47 billion, and its income from operations came in at $4.95 billion for the quarter. The company’s non-GAAP net income and EPS were $5.60 billion and $0.28 for the period, respectively.

In addition, the company’s adjusted EBITDA and free cash flow totaled $7.04 billion and $2.39 billion for the quarter, respectively.

Analysts expect BABA’s revenue and EPS for the third quarter (ending December 2024) to increase 8.9% and 3.5% year-over-year to $39.42 billion and $2.73, respectively. For the fiscal year (ending March 2025), the company’s revenue and EPS are expected to grow 7.8% and 2.3% year-over-year to $140.24 billion and $8.80.

BABA’s shares have gained 30.8% over the past six months and 20.2% over the past year to close the last trading session at $99.93.

BABA’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has a B grade for Quality. Within the A-rated China industry, BABA is ranked #18 among the 42 stocks.

In addition to the POWR Ratings we’ve stated above, we also have BABA ratings for Stability, Growth, Sentiment, Momentum, and Value. Get all BABA ratings here.

eBay Inc. (EBAY)

EBAY operates marketplace platforms that connect buyers and sellers worldwide. The company's marketplace platform consists of its online marketplace at ebay.com, off-platform businesses, and the eBay suite of mobile apps.

On July 10, EBAY and Liberis, a leading global embedded finance platform, partnered to launch Business Cash Advance, a new eBay Seller Capital revenue-based financing product. Business Cash Advance supports eBay sellers at every business stage by providing eligible U.S. eBay sellers with up to $1 million in working capital in less than 24 hours.

During the second quarter that ended June 30, 2024, EBAY’s net revenues increased 1.3% year-over-year to $2.57 billion, while its gross profit rose marginally year-over-year to $1.84 billion. The company’s income from operations of $549 million reflects a growth of 6% from the year-ago value.

In addition, the company’s non-GAAP net income from continuing operations of $602 million and $1.18 per share, up 8.5% and 14.6% over the prior year’s quarter, respectively.

As per the company's third-quarter 2024 guidance, EBAY expects revenue between $2.50 billion and $2.56 billion. And its non-GAAP EPS is expected to be $1.15 - $1.20.

Analysts expect EBAY’s EPS for the third quarter (ended September 2024) to increase 14.6% year-over-year to $1.18, and its revenue is estimated to grow 1.8% year-over-year to $2.55 billion for the same period. Moreover, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

EBAY’s stock has soared 19.4% over the past six months and 63% over the past year to close the last trading session at $62.99.

EBAY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.

EBAY has an A grade for Quality. It is ranked #19 among the 53 stocks in the B-rated Internet industry.

Click here to access additional EBAY ratings for Sentiment, Value, Stability, Momentum, and Growth.

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AMZN shares rose $2.29 (+1.20%) in after-hours trading Tuesday. Year-to-date, AMZN has gained 25.60%, versus a 23.55% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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