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5 ETFs to Tap Amazon's Growth Story

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Amazon (AMZN - Free Report) registered its first new all-time high in almost three years in the Apr 11 trading session and is edging closer to the $2 trillion mark. This reflects a dramatic rebound from its slump in 2022 and the resurgence of confidence in Amazon’s future growth potential, driven by the AI transformation and the leadership transition to Andy Jassy.

This e-commerce giant has joined tech giants Meta Platforms Inc. (META - Free Report) , Microsoft Corp. (MSFT - Free Report) and Nvidia Corp. (NVDA - Free Report) in setting a fresh record.

Investors seeking to tap the bullish trend could consider ETFs having a substantial allocation to this online behemoth. These include ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) .

Solid Growth Story

Amazon's growth story hinges on its robust retail business, strengthening its cloud division, growing investments in generative AI, solid advertising business and expanding streaming services (read: ETFs in Focus With Fed Rate Cuts in the Cards).

The new CEO, Andy Jassy, forecasts that the company will get a boost from strategic cost cuts, cloud-computing demand and the growth of artificial intelligence. In his annual letter to shareholders, Jassy highlighted the tech giant's approach to generative AI, which he described as Amazon's potential next pillar of growth, following its e-commerce marketplace, Prime subscription service and Amazon Web Services cloud-computing business. "Generative AI may be the largest technology transformation since the cloud (which itself, is still in the early stages), and perhaps since the Internet," Jassy wrote.

Amazon's strategic plans for growth are also highlighted by its possible entry into the grocery sector and its focus on "primitives" to drive innovation. In the near future, legal issues could present hurdles, but looking further ahead, advancements in AI have the potential to transform multiple industries, offering both challenges and prospects.

Amazon shares have surged about 20% this year, outpacing the gains for the S&P 500 Index.

Bulls Are Here!

Wall Street is also bullish on the stock. Amazon currently has an average brokerage recommendation (ABR) of 1.11 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 46 brokerage firms. The current ABR compares to an ABR of 1.11 a month ago based on 46 recommendations.

Of the 46 recommendations deriving the current ABR, 42 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 91.3% and 6.52% of all recommendations. A month ago, Strong Buy made up 91.3%, while Buy represented 6.52%.

Based on short-term price targets offered by 43 analysts, the average price target for Amazon comes to $205.79. The forecasts range from a low of $140.00 to a high of $230.00.

AMZN currently has a Zacks Rank #3 (Hold) and a top Growth Score of A. The stock falls under a top-ranked Zacks industry (top 17%).

ETFs to Buy

ProShares Online Retail ETF (ONLN - Free Report)

ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 18 stocks in its basket. Amazon is the top firm, accounting for 24.8% of the portfolio.

ProShares Online Retail ETF has amassed $98.6 million in its asset base and currently trades in a moderate volume of around 20,000 shares a day on average. It charges 58 bps in annual fees from investors (read: 4 ETF Areas to Play on Moderately Soft February Retail Sales).

Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)

Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 285 stocks in its basket. Of these, Amazon takes the top spot with a 23% share.

Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.4 billion in its asset base while trading in a good volume of around 81,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

Vanguard Consumer Discretionary ETF (VCR - Free Report)

Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 306 stocks in its basket. Of these, Amazon occupies the top position, with a 22.7% allocation. Broadline Retail takes the largest share at 25%, while automobile manufacturers, restaurants, and home improvement retail round off the next three spots (read: 5 Favorite Sector ETFs of Q1 Earnings).

VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 66,000 shares a day. The product has managed about $5.5 billion in its asset base and carries a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most popular product in this space, with AUM of nearly $20.5 billion and an average daily volume of around 5 million shares. Holding 52 securities in its basket, Amazon takes the top spot with 24.6% of assets. Broadline retail, specialty retail, hotels, restaurants & leisure and automobiles are the top four sectors with a double-digit exposure each.

Consumer Discretionary Select Sector SPDR Fund charges 0.09% in expense ratio and has a Zacks ETF Rank #1 with a Medium risk outlook.

VanEck Vectors Retail ETF (RTH - Free Report)

VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with a 21.7% share.

VanEck Vectors Retail ETF has amassed $210.1 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #2 with a Medium risk outlook.

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