Amazon (NASDAQ: AMZN) has long been synonymous with wealth creation, transforming modest investments into life-changing fortunes. Since its IPO on May 15, 1997, the company has delivered an incredible 186,180% return, turning a $10,000 investment into $30 million today.
This success stems from Amazon’s unmatched growth trajectory, evolving from a niche online bookstore to a global e-commerce juggernaut and the dominant player in cloud computing through Amazon Web Services (AWS).
But with Amazon now a $2.39 trillion behemoth, investors are wondering whether it can still live up to its millionaire-maker reputation.
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Pandemic boom and post-pandemic challenges
Over the past four years, Amazon has weathered significant highs and lows. The pandemic years of 2020 and 2021 fueled a strong surge in online shopping, propelling its growth to new heights.
In 2022, growth slowed as pandemic-related tailwinds faded, inflation constrained consumer spending, and cloud clients reduced expenditures amid rising interest rates. These challenges, coupled with losses from Amazon’s investment in Rivian (NASDAQ: RIVN), led to a net loss for the year.
However, 2023 marked a turnaround. Amazon stabilized its e-commerce business and reignited AWS growth, which accelerated in 2024 as enterprises ramped up AI-driven infrastructure spending. In Q3 2024, net sales grew 11% year-over-year to $158.9 billion, while operating income surged 55% to $17.4 billion.
AWS played a pivotal role in this growth, with net sales increasing 19% year-over-year to $27.5 billion, while its operating margins expanded to 38.1%. Meanwhile, Amazon’s North America segment reported a 9% rise in sales to $95.5 billion, and its International segment saw a 12% increase to $35.9 billion.
Looking forward, Amazon has projected Q4 2024 net sales to fall between $181.5 billion and $188.5 billion, reflecting the company’s strategic investments in AI and cloud infrastructure.
AWS and AI: The growth catalysts
Amazon Web Services remains a cornerstone of its growth strategy. AWS has unveiled several ambitious AI projects aimed at solidifying its dominance in cloud computing and artificial intelligence.
Among these is Project Rainier, a supercomputer powered by AWS’s Trainium chips, set to challenge Nvidia’s GPUs in large-scale AI model training when it launches in 2025.
Another initiative, Project Ceiba, is being developed in collaboration with Nvidia (NASDAQ: NVDA) and will feature over 20,000 Blackwell GPUs for advanced AI tasks. AWS is also rolling out the UltraServer, an AI-optimized cloud server powered by its Trainium chips.
These efforts are bolstered by partnerships with tech leaders such as Apple, which is integrating Trainium chips into its Apple Intelligence AI technologies, and Anthropic, with which Amazon has invested $8 billion to refine AI infrastructure.
The e-commerce segment, while mature, is also innovating, as seen with the launch of “Haul,” a platform targeting budget-conscious shoppers to compete with low-cost rivals like Shein and Temu.
Amazon’s advertising business has quietly become another critical growth engine. Ad revenue jumped 19% year-over-year in Q3 2024 to $14.3 billion, driven by the company’s dominance in e-commerce and streaming platforms.
Despite its scale, Amazon’s valuation remains compelling. With a forward price-to-earnings (P/E) ratio of 38 and a price-to-sales ratio of 3.4, the stock is well-positioned for continued growth.
Investor optimism fuels momentum
Analysts remain bullish on Amazon’s prospects. JPMorgan recently dubbed the company “the best idea among internet stocks,” citing its diversified growth engines and strategic investments.
As of the market close on December 6, 2024, Amazon’s stock was trading at $227.03, reflecting a one-day gain of 2.94%. Year-to-date, the stock has surged by an impressive 55.1%, underscoring strong investor confidence and robust market performance.
While Amazon’s past millionaire-making gains are unlikely to be replicated, its diversified growth engines—AWS, AI, advertising, and e-commerce—make it a compelling investment for long-term wealth creation.
Notably, Cathie Wood of Ark Invest has increased her Amazon holdings, highlighting confidence in its potential to capitalize on disruptive innovation.
Verdict: Is Amazon still a millionaire-maker stock?
Amazon has historically created immense wealth, but its days of delivering outsized returns may be behind it.
That said, its strong presence in e-commerce and cloud computing, combined with its aggressive AI initiatives, positions it as a robust investment for the future.
Investors looking for a steady growth stock with exposure to transformative industries like AI and cloud computing should consider Amazon a core holding.
Featured image via Shutterstock
