Amazon, which started as an online book retailer in 1994, has become a giant in e-commerce and cloud computing. While the company’s stock fell nearly 50% in 2022 due to macroeconomic headwinds affecting its e-commerce business, Amazon has maintained significant long-term growth.
Investing in Amazon Stock 10 Years Ago Would Yield Substantial Gains
An investment of $10,000 in Amazon stock in January 2013 would be worth $78,138.51 today, with an annual rate of return of 22.42%. This shows that long-term investment in stocks can safeguard investments against short-term headwinds.
E-Commerce Sales and Revenue Growth
From 2014 to 2022, Amazon’s e-commerce sales grew over 320%, reaching $5.72 billion. The market is projected to hit $8.15 billion by 2026. Amazon’s revenue has risen by 741% in the last 10 years to $513.98 billion, and operating income has increased 1,700% to $12.25 billion.
2022 E-Commerce Stumble
Amazon’s e-commerce business stumbled in 2022 amid economic declines, with related segments reporting combined operating losses of $10.5 billion in the year. However, the industry is projected to continue expanding at a CAGR of 14.7% through 2027, with Amazon likely to profit significantly.
AWS Revenue Growth
Amazon’s cloud platform, AWS, was responsible for 100% of Amazon’s $12.2 billion in operating income in 2022, after a 28.7% YoY rise in revenue of $80 billion. AWS holds a leading 34% market share in the cloud industry, and the market is expected to grow at a CAGR of 14.1% through 2030.
Amazon shares have soared 612% in the last 10 years, even with the sell-off in 2022.
Amazon’s Future Outlook
Despite its long-term growth, Amazon’s free cash flow and P/E ratio have declined over the last year, making it less attractive compared to other companies in the tech industry. Investors looking to invest in Amazon should keep an eye on the stock and wait for the right time to buy. Other companies in the tech industry may offer more attractive investment options at the moment.
In summary, Amazon’s success in expanding beyond its roots as an online book retailer has been impressive, as evidenced by the company’s substantial revenue and operating income growth over the past decade. While the economic downturn in 2022 had a significant impact on the company’s e-commerce business, projections for the industry’s continued expansion bode well for Amazon’s future growth prospects. Additionally, the company’s dominant position in the cloud computing industry, through AWS, presents an additional opportunity for growth.
Investors should take note, however, that Amazon’s free cash flow and P/E ratio have declined over the last year, potentially making it less attractive compared to other tech companies. Nonetheless, Amazon’s track record of long-term growth suggests that it may be worth considering as part of a diversified portfolio. As always, it is essential to do your due diligence before making any investment decisions and consult with a financial advisor to determine the best strategy for your individual investment goals and risk tolerance.
