It would take some time to find a business that has done a better job making its investors rich than Amazon (AMZN 1.40%) has. Since the company's initial public offering in 1997, shares have skyrocketed 230,000% (as of July 14). There is no doubt that a large group of investors have become millionaires from owning Amazon over the years.
The business is a clear leader in various categories, and its market cap of $2.4 trillion indicates just how dominant Amazon has become. But maybe there is still some opportunity here.
If you invest $10,000 in this top technology stock in 2025, will you become a millionaire in 10 years? Here's what investors need to know about Amazon's merits as we look toward the next decade.
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No shortage of reasons why Amazon is an outstanding company
Amazon is one of the world's great businesses, with multiple growth drivers. Not only is it a leader in online shopping, Amazon is also a budding digital ad provider. Additionally, it makes money from cloud computing with Amazon Web Services (AWS), an already sizable market player that has potential for huge expansion.
Amazon has developed a wide economic moat. Its online marketplace benefits from a powerful network effect, with merchants and buyers finding more value as the platform gets bigger. Thanks to significant investments to bolster the logistics network, there are cost advantages at play. AWS has the same benefit, due to large upfront fixed costs to build out the necessary infrastructure to serve customers.
AWS customers also face switching costs. As these clients onboard and integrate their own operations with the cloud platform, it becomes difficult to leave. And with so much data being collected throughout the business, Amazon can leverage this intangible asset to direct strategic moves or product enhancements.
Amazon's growth tailwinds, as well as its economic moat, are obvious reasons why this is a great business. Investors aren't losing sleep at night when thinking about the chances that Amazon will get disrupted anytime soon. This is a dominant enterprise that isn't going away.
Another reason to appreciate this company is that it's getting stronger from a financial perspective. Historically, Amazon was focused mainly on growing revenue as quickly as possible. Because it was constantly reinvesting massive sums into the business, profits were low on paper. We're seeing this change lately, though.
CEO Andy Jassy has made it a priority to create a more efficient organization, controlling expenses along the way. Amazon is projected to generate $77.7 billion in operating income this year, according to Wall Street consensus analyst estimates. This would represent a more than 100% gain compared to 2023.
NASDAQ: AMZN
Key Data Points
Amazon has made investors rich in the past, but the future won't be the same
Just in the past 10 years, Amazon's stock price has climbed an impressive 891%. Look back even further, and the numbers are even more jaw-dropping. But with its current scale, it's hard to believe these gains will repeat going forward. Trees don't grow to the sky, as they say.
This means that investors shouldn't expect Amazon to turn a $10,000 investment today into a cool $1 million by the summer of 2035. This seven-figure target implies a monster 100-fold gain, or 58.5% annualized, over the next decade. That's not a sensible view to have for any financial asset.
This doesn't mean that Amazon isn't worthy of investment consideration right now. Shares trade at a price-to-earnings ratio of 36.7, which I think isn't unreasonable given all the positive attributes already mentioned. The stock has a good shot at outperforming the broader market over the next 10 years.
