Motley Fool: An undervalued titan

Amazon.com (Nasdaq: AMZN) is a relentless innovator that has greatly benefited long-term shareholders. Its dominance in e-commerce and its growing revenue streams in advertising and cloud computing provide multiple ways for the company to increase the value of your investment over time.

Amazon’s online retail business has a durable competitive advantage built on its extensive infrastructure and same-day delivery to customers in cities across the U.S. While other large retailers have escalated their e-commerce game in recent years, Amazon continues to stay a step ahead. In the fourth-quarter earnings release, management noted that in 2025 its Rufus AI-powered shopping assistant was used by more than 300 million customers and helped generate nearly $12 billion in incremental annualized sales.

Adding to its e-commerce advantages, the company’s large customer base has turned into an advertising magnet. As more brands shift their ad spending to digital platforms, Amazon is clearly positioned to benefit. In the fourth quarter, Amazon Web Services revenue rose 24% year over year, and the segment generated roughly half of the company’s total profits. The cloud computing platform is Amazon’s AI growth engine.

An investment in Amazon should lead to compounding returns for years to come. (The Motley Fool owns shares of and recommends Amazon.com.)

My dumbest investment

My not-so-smart investment was buying 200 shares of Nvidia in 2016 at $45 and then selling at $63 after four months, thinking it was due to drop back down after rising so quickly. I didn’t get back into it until January 2025! – D.R., North Royalton, Ohio

The Fool responds: Ouch. There have been two stock splits since your initial purchase, which would have shrunk your “cost basis” (purchase price, for tax purposes) to about $1.13 per share. With shares recently around $180 apiece, you would have enjoyed a 158-fold increase in your investment had you held on. But only hindsight is 20/20. If you’d lost faith in the company, selling would have been prudent. It’s often best to just hang on, though, if you’re merely expecting a pullback in a stock’s price; the best performers will keep growing and reaching new highs over years or decades, despite occasional pullbacks.

You did well to get back into Nvidia in January 2025. If you did so at the beginning of that month, you’ve already seen your shares grow by more than 32%. Remember to keep looking forward, not back. As long as you see a rosy future for Nvidia, hang on.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@ fool.com.)

Ask the Fool

Q. I saw that LyondellBasell Industries recently cut its quarterly dividend in half. Why would it do that? – S.N., West Palm Beach, Florida

A. LyondellBasell Industries is a petrochemical company that has been struggling recently. Its annual revenue dropped from over $50 billion in 2022 to around $30 billion recently – with net income turning into net losses.

It’s worth noting that it’s in a cyclical industry, so periods of boom and bust are to be expected. Dow (the chemical company, not the index) also halved its dividend, back in July. Companies hate cutting dividends, as it disappoints investors and doesn’t inspire confidence, yet they will sometimes do so to save money and bolster their financial health.

These cuts are a reminder that well-respected companies can fall on tough times and that dividends don’t always grow. Most dividend-paying companies try hard to not have to shrink their payouts, and many have built long streaks of consecutive annual increases.

Q. What are some good books on the history of the stock market? – V.T., Bay City, Michigan

A. There are many. “Learn to Earn” by Peter Lynch (Simon & Schuster, $19) offers a concise review. “Devil Take the Hindmost: A History of Financial Speculation” by Edward Chancellor (Plume, $20) offers a broad review of historical follies, while Peter Bernstein’s “Capital Ideas: The Improbable Origins of Modern Wall Street” (Wiley, $23) is more academic. You might also check out “Boom and Bust: A Global History of Financial Bubbles” by William Quinn and John D. Turner (Cambridge University Press, $22) and “A History of the United States in Five Crashes: Stock Market Meltdowns That Defined a Nation” by Scott Nations (Williams Morrow, $19).