Amazon’s Diverse Growth Engines Position It for Future Success

As of May 15, the S&P 500 index has returned to positive territory in 2025. This widely followed benchmark experienced a tumultuous year, primarily due to trade uncertainties. Nonetheless, since early April, it has surged back, showcasing a rebound in investor confidence.

Despite these overall market gains, some companies still struggle to recover. For instance, shares of a leading tech-driven firm have jumped 850% over the last decade but remain 15% below their all-time high. This could indicate an investment opportunity.

Amazon: Positioned for E-commerce Growth

Investors are likely familiar with e-commerce powerhouse Amazon (NASDAQ: AMZN). This retail leader captures nearly 40% of U.S. online spending, allowing it to benefit significantly from the ongoing rise in e-commerce. Recent pauses on tariffs are expected to boost confidence among Amazon’s merchants and shoppers alike.

In April, Amazon’s online marketplace attracted 2.6 billion visitors, creating substantial engagement that is now starting to convert into revenue. In the first quarter, the company generated $13.9 billion in advertising revenue, which is rapidly becoming a critical financial contributor for the business.

Digital advertising offers high margins, which may enhance Amazon’s profitability over time. Notably, only Alphabet and Meta Platforms possess a larger market share in the digital advertising sector.

Amazon Prime Video, boasting over 200 million subscribers, is also a leading streaming service, benefiting from the ongoing cord-cutting trend as consumers shift toward internet-based solutions.

Interestingly, we are still in the early stages of transitioning IT spending from on-premises solutions to cloud services. CEO Andy Jassy estimates that approximately 15% of business IT has moved to the cloud. Amazon Web Services (AWS), the company’s cloud computing arm, reported an impressive 39.5% operating margin in Q1, solidifying its industry leadership.

AWS also positions Amazon at the forefront of artificial intelligence (AI). The company is developing its own graphics processing units and offers a wide array of products and services that enable clients to leverage AI effectively within their operations.

In summary, few companies can capitalize on so many powerful trends. Through e-commerce, digital advertising, streaming services, cloud computing, and AI, Amazon is uniquely poised for sustained growth.

Analyzing Amazon’s Stock Potential

Few stocks rival Amazon’s impressive performance. Over the past two decades, shares have soared by 12,010%. Today, with the stock trading 15% below its peak, investors can acquire shares at a price-to-sales ratio of 3.4, aligning with the past five-year average—an attractive opportunity, in my view.

With net sales of $650 billion and a market capitalization of $2.2 trillion, some may question Amazon’s future potential for returns. However, this concern—primarily regarding the challenges posed by its massive scale—has been raised in previous years, yet the stock continues to perform well for investors.

According to Wall Street consensus estimates, analysts project the company will achieve revenue and earnings per share growth rates of 9.4% and 17.5%, respectively. Considering the robust growth trends discussed, Amazon appears capable of delivering sustainable financial gains over the long term. Therefore, it is a solid stock to acquire now and hold for the next five years.

Discover New Investment Opportunities

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*Returns as of May 12, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors. Suzanne Frey, an executive at Alphabet, is also on the board. Randi Zuckerberg, a former director at Facebook and sister to its CEO, is a board member as well. Neil Patel does not hold positions in any stocks mentioned. We have positions in and recommend Alphabet, Amazon, and Meta Platforms. Our disclosure policy is available for review.

The views and opinions expressed herein are the author’s and do not necessarily reflect any corporate affiliations.