Investors responded enthusiastically to Amazon's (AMZN 3.20%) stock split at the beginning of June, and its stock price has gone up 15% since then. But buying stock purely for a potential short-term boost is a short-sighted approach to investing, and doesn't offer any end game to grow your funds. 

Now comes the real work of determining if Amazon stock is a worthwhile purchase based on its future potential. And the answer is a resounding yes. Here's why.

Forging a path forward

We think of Amazon as the e-commerce king, but even that was an innovation for a company that began as a bookseller. Its propensity to enter new territory without fear is what has made it the second-largest company in the U.S., and having its finger in many pies gives it leverage to continue dominating new sectors.

Amazon's acquisitions have beefed up its business since it started its buying spree way back in 1998, when it was less than four years old and had $610 million in annual revenue. But it was already making bold moves where there were very obvious and lucrative opportunities in a still-burgeoning online market. Its first three acquisitions were e-commerce companies in Germany and the U.K. that it rebranded as Amazon.

It expanded into its first new service, offering music and becoming the leading music retailer in its first full quarter. That was followed by a video service later that became the leading video retailer in six weeks. Looking back, these were no-brainer moves that propelled the company into a leading position in e-commerce. Now the stakes are higher, but the expansion culture is still part of Amazon's DNA, and it's part of how the company does business.

Amazon's acquisition count is nearing the 100 mark, and it doesn't seem to be slowing down. Last year, it acquired Metro Goldwyn Mayer (MGM) studios for $8.5 billion, its second-most-expensive acquisition behind Whole Foods at $13.4 billion in 2017. In 2022, it has already announced that it's acquiring telehealth company One Medical for $3.9 billion, and it recently announced it's acquiring iRobot for $1.7 billion.

The MGM studios buyout brings Amazon Prime in line with other major studios' streaming efforts. If Amazon Prime streaming wants to be able to compete with Netflix, Walt Disney's Disney+, and all of the other new streaming services, adding thousands of titles to its library goes a long way. 

The One Medical deal augments Amazon's efforts in healthcare, a huge industry in which Amazon is just getting its feet wet. The potential here is enormous, and Amazon is taking slow and steady steps to become a major player. As usual, Amazon sees the opportunity to shake things up in the medical industry, which it describes as "high on the list of experiences that need reinvention." Telehealth and other health technology relieve some of the pain points of the healthcare experience, such as long waits for appointments, long waiting times at clinics, and other time-wasting experiences. 

The iRobot acquisition is a natural alliance for Amazon, which already markets its own large assortment of home technology devices. It has been an e-commerce partner of iRobot, which makes products like autonomous vacuum cleaner Roomba, for many years.

Can it continue?

When Amazon began acquiring companies nearly 25 years ago, it looked risky. But it was rewarding immediately, and even more so later on. CEO Andy Jassy only took the helm a year ago, but he's been with Amazon since its early days and knows the culture. The acquisition model is an important feature of the company's business, and allows it to use its extensive resources to dominate new industries and scale its growth.

Amazon doesn't look like it's anywhere near finished, and investors should expect continued growth and gains from Amazon stock.