Amazon (AMZN -1.11%) is arguably one of the most recognizable companies in the world, but that wasn't always the case. The company was founded as a simple online bookstore in 1994, but its mission quickly changed.

After adding music and videos in 1997, founder and former Chief Executive Officer Jeff Bezos decided to crowdsource the company's next move. In an interview in 2018, Bezos shared the catalyst for its rapid product expansion. "I emailed a thousand randomly selected customers and asked them, 'besides the things we sell today, what would you like to see us sell?'" The wide-ranging and diverse answers inspired Bezos, who quickly decided "we can sell anything this way."  

From humble beginnings, Amazon stock has soared a mind-boggling 132,000%, making it the third-best performing stock over the past 30 years. That means a $10,000 investment at its IPO would be worth a cool $13 million today. Even a more modest investment of $1,000 would have yielded a profit of about $1.3 million.

A couple lying on the floor entering credit card info into a laptop.

Image source: Getty Images.

Unfortunately, the current economic headwinds have been challenging for Amazon. Digital shoppers have curtailed spending in the face of historically high inflation and rising interest rates, making 2022 Amazon's first unprofitable year in nearly a decade. These factors punished the stock, which is down 47% from its peak.

Yet for investors with a long-term outlook, there's still plenty of opportunity ahead for Amazon.

The death of e-commerce is greatly exaggerated

Amazon now dominates the e-commerce industry it helped to pioneer. It's the world's largest digital retailer, capturing an estimated 38% of the market -- more than its next 15 competitors combined -- according to data compiled by Statista. Not only is Amazon the largest e-commerce site, it's also the second-largest retailer, according to Deliotte's Global Powers of Retailing 2023 report. In fact, Amazon is expected to surpass market leader Walmart by 2024 to become the No. 1 retailer, according industry analytics firm Ascential. 

Amazon's e-commerce dominance was fueled by relentless expansion, which includes continued investment in its logistics network and Fulfillment by Amazon, which helps the company continue to increase the selection of products in its same-day, one-day, and two-day deliveries.

Yet, for all the naysayers proclaiming the fall of digital retail, its growth is far from over. This year, the global e-commerce market is expected to grow to $6.3 trillion, up from $5.7 trillion in 2022, an increase of 10.4% -- that's more than twice the growth rate of overall retail sales. Perhaps more importantly, e-commerce represents a growing part of the market. In 2022, digital sales represented 19.7% of total retail, but that's expected to grow to 24% by 2026, according to data compiled by market research company Oberlo. 

As the undisputed e-commerce leader, Amazon is well positioned to continue to increase its share of this fast-growing market.

Amazon has its head in the clouds

Cloud computing is another area that Amazon pioneered, and it's still the clear leader. Amazon Web Services (AWS) controlled 32% of the cloud infrastructure market in the fourth quarter of 2022, according to research firm Canalys. That was nearly as much as Microsoft Azure and Alphabet's Google Cloud combined, which represented 23% and 10%, respectively, 

From an innovation standpoint, AWS has no equal, at least according to IT research firm Gartner, which named AWS a Leader in its 2022 Cloud Infrastructure & Platform Services Magic Quadrant for the 12th consecutive year, making it the longest running leader in the industry. The report noted "AWS continues to have the greatest breadth and depth of capabilities of any provider in the market." It also cited the company's "vibrant and prosperous ecosystem," which it calls "a magnet" for partners. 

Amazon's lead will serve the company well as the industry continues to grow. The global cloud computing market was valued $484 billion in 2022 but is expected to grow to $1.39 trillion by 2030, a compound annual growth rate of 14.1%, according to Grandview Research. This provides Amazon with a long runway for growth. Furthermore, AWS generated net sales of more than $80 billion in 2022, nearly 16% of Amazon's total revenue. The segment was by far the company's most profitable, generating juicy operating margins of nearly 29%. 

Digital advertising -- the third leg of Amazon's stool

Not content to have just two industry-leading businesses, Amazon has quickly become a rising star in the digital advertising industry. The company's ad tech chops are undeniable, as evidenced by its No. 3 position last year, with 9% of the worldwide digital ad market. For context, it trails just Google and Meta Platforms, which control 29% and 11% of the market, respectively. Perhaps more importantly, Amazon's ad business continued to grow, as revenue rose 19% in the fourth quarter, even as its chief rivals reported declines. 

The global digital ad market was valued at $602 billion in 2022, but is forecast to climb to $876 billion by 2026, representing roughly 10% growth annually according to eMarketer. Furthermore, digital ad spending is expected to grow to nearly 74% of all media ad spending, up from 66% last year. Amazon will likely grow faster, fueled by its online marketplace, Fire TV streaming platform, IMDB (its online movie database), Box Office Mojo (its box office performance site), and Freevee (its homegrown ad-supported streaming service). Each of these outlets provides Amazon with an opportunity to turn its nascent digital advertising business into an even stronger growth driver.

All this potential at a discount

With this three-pronged growth platform as a backdrop, Amazon stock currently trades for less than 2 times sales -- the very definition of a bargain -- as most experts agree that a good price-to-sales ratio is between 1 and 2. Add to that its industry-leading positions in e-commerce and cloud computing, and its strong position in digital advertising, and it's clear that Amazon stock is a screaming buy.