Amazon‘s (AMZN 2.14%) innovation in retail has generated phenomenal returns for investors over the last few decades. The stock remains a strong investment, particularly as the company continues to use artificial intelligence (AI) to improve all aspects of its operations. This could ultimately drive significant growth in margins and free cash flow, pushing the stock higher.

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Why buy Amazon stock?

AI is already making an impact on the company’s e-commerce business. During the third-quarter earnings call in October, management noted that its Rufus shopping assistant is on track to generate $10 billion in incremental annualized sales, indicating that customers are increasingly using it to find products to buy.

This is not a significant amount relative to Amazon’s $691 billion in total revenue; however, the impact on sales should grow as AI becomes more advanced and adoption increases over the next few decades.

Amazon

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Just as the company outpaced established retail stores in the e-commerce market, it is also leading the charge in AI. As Rufus becomes smarter and more customers use it, Amazon should benefit in more ways than just higher sales conversions. Rufus can potentially boost profits by helping customers find the right products, reducing the number of costly returns.

Rufus is just one example of how Amazon is using AI to drive growth. It is aggressively rolling out robots in its warehouses to accelerate order processing and shipping speeds. It is also incorporating AI into its digital advertising business. Finally, its Amazon Web Services business will get a long-term boost from the exponential growth in use of its servers to manage growing AI operations from clients.

The profit opportunity from these AI initiatives is not lost on Wall Street. Analysts expect free cash flow to soar from $38 billion in 2024 to $141 billion by 2029. That level of growth makes the stock an attractive long-term investment.