Amazon (AMZN -0.68%) stock has fallen 3% year to date while the S&P 500 (SNPINDEX: ^GSPC) has advanced 3%. But Wall Street anticipates a stronger performance from the retail giant over the next year. The median target price among 71 analysts is $240 per share, which implies 13% upside from its current share price of $212.
Tariffs are a big reason the stock has struggled in 2025, but sentiment appears to be on the upswing since the Trump administration de-escalated trade tensions with China. A recent survey from Charles Schwab shows Amazon was the third most-popular stock among retail investors in May.
Can Amazon turn $5,000 invested today into $100,000 over the next decade? Here are my thoughts.
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Amazon's strength in e-commerce, advertising, and cloud computing are reasons to own the stock
Amazon has a strong position in three growing industries. The company operates the most popular online marketplace worldwide as measured by traffic, and it is the largest online retailer as measured by revenue. Amazon is also the third-largest ad tech company, and Amazon Web Services (AWS) is the largest public cloud.
The investment thesis is simple: Amazon's strong position in those industries should drive double-digit sales growth annually through the end of the decade. I say that because those industries are expanding at a double-digit pace. The estimates below come from Grand View Research:
- Retail e-commerce sales are projected to grow at 11.6% annually through 2030.
- Ad tech spending is forecast to increase at 14.4% annually through 2030.
- Cloud computing sales are projected to grow at 20.4% annually through 2030.
Additionally, Amazon should become more profitable over time as two tailwinds drive its margins higher. First, the company is building 1,000+ generative artificial intelligence (AI) applications to automate and optimize tasks like coding, customer service, inventory management, and logistics. It's also infusing warehouse robots with generative AI so human workers can instruct them in natural language.
Second, digital advertising and cloud computing services earn higher margins than retail. Amazon in the first quarter reported double-digit sales growth in its advertising and cloud segments versus single-digit sales growth in its retail segments. That means the high-margin revenue streams are increasing more quickly, which will lift its total profit margin over time.
As a caveat, Amazon could struggle with tariffs in the near term. About one-third of sellers on the marketplace are based in China, and those brands account for a material percentage of advertising revenue. However, to quote portfolio managers at Baron Capital, "The company has repeatedly proven its ability to navigate complex environments and emerge stronger."
Wall Street estimates Amazon's earnings will increase at 10% annually through 2026. That makes the current valuation of 35 times earnings look expensive, but I suspect analysts are underestimating the company. Amazon topped the consensus estimate by an average of 21% in the last six quarters. I think that trend will continue due to its strong position in three growing industries.
Amazon is a good investment, but the stock is unlikely to turn $5,000 into $100,000 in the next decade
Amazon stock must increase 20-fold (1,900%) to turn $5,000 into $100,000 during the next decade. Returns of that magnitude are possible, but they happen infrequently. In fact, only five stocks in the S&P 500 increased at least 20-fold during the last decade as of June 12, 2025. They are listed below:
- Nvidia: +27,250%
- Advanced Micro Devices: +5,030%
- Axon Enterprise: +2,180%
- Texas Pacific Land: +2,050%
- Fair Isaac: +1,910%
However, I doubt Amazon can generate a 20-fold return in the next decade simply because the company is already worth $2.3 trillion. And multiplying that number by 20 would take its market value to $46 trillion, which is approximately what the entire S&P 500 is worth today. That seems an unlikely outcome.
Nevertheless, I think Amazon is a worthwhile long-term investment at its current price. The company has a strong position in three growing industries and a track record for beating Wall Street's earnings estimates. That combination led to Amazon stock outperforming the S&P 500 by 40 percentage points over the last three years, and I expect continued outperformance in the next three years.
