Amazon (NASDAQ: AMZN) has been one of the most rewarding stocks of the past quarter century, turning modest investments into life-changing wealth for patient shareholders.
A $10,000 investment in Amazon made 25 years ago would be worth over $6 million today, representing one of the most remarkable long-term returns in stock market history.
However, past performance is what it is, and the more pressing question for investors now is what the next four years could look like for the company.
Amazon built its empire on the back of e-commerce and logistics infrastructure, expanding aggressively across North America and well beyond U.S. and Canadian borders over the decades.
That e-commerce foundation got Amazon to where it is today, but analysts believe it will be Amazon Web Services (AWS), the company’s cloud computing division, that drives the next leg of growth.
Cloud computing is experiencing a surge in demand as AI firms, longstanding enterprise clients, and organisations requiring additional computing capacity all compete for scarce accelerated computing resources.
To meet that demand, Amazon is spending $220 billion on capital expenditures this year, with the bulk of that going toward building new data centers capable of handling next-generation AI workloads.
During the second quarter, AWS revenue rose 37% year over year, more than double the 16% growth posted by Amazon’s North American commerce segment and the 15% growth from its international business.
AWS currently accounts for about 21% of Amazon’s total revenue, yet that same 21% generated 60% of the company’s total operating income, thanks to vastly superior margins compared to its commerce units.
AWS carries a 39% operating margin, and if that holds while AWS grows at an annualised rate of 30% through 2030, the division could generate $483 billion in revenue and $190 billion in operating profit that year.
By comparison, Amazon’s total operating income over the past 12 months stood at $93.7 billion, underscoring how transformative AWS growth could be for the company’s overall financial profile.
Projecting a 10% growth rate and a 7% operating margin for the other business units, North American commerce could contribute nearly $700 billion in revenue but only around $49 billion in operating income.
The international segment is projected to generate $65 billion in revenue and approximately $4.5 billion in operating income, making it the least profitable piece of the puzzle by a significant margin.
Combined, those projections point to roughly $260 billion in total operating income across Amazon’s business by the end of the decade, a dramatic improvement on today’s figures.
Amazon currently trades at 29 times operating income, and even if that multiple compresses to 25 times, the math produces a market capitalisation of approximately $6.5 trillion.
Amazon’s current market cap sits at $2.8 trillion, with shares priced around $260, meaning the path to a $600 per share price tag would represent more than a doubling of today’s valuation.
For an investor putting $10,000 into AMZN today, that scenario translates into a position worth more than $23,000 by the end of 2030, based on those conservative projections.
The prospect of a stock doubling in under five years based on measured, conservative assumptions makes a compelling case for Amazon as one of the stronger long-term investment opportunities available right now.
