Amazon (AMZN 0.17%) has generally served as a market stalwart since it launched its IPO in 1997. The company pioneered e-commerce in the U.S. and much of the developed world and later spawned the cloud computing industry as a side effect of its efforts to make e-commerce more widely available.
Consequently, it is one of the largest and most respected stocks on the market today, and its place among the so-called "Magnificent Seven" stocks cements that legacy. Nonetheless, investors may struggle with what to make of its five-year performance. Here's why.
Image source: Amazon.
Amazon over the last five years
Over the past five years, Amazon's stock price rose 44%, well below the S&P 500's approximate 86% return. This may come as a surprise to investors, as it has turned a $1,000 investment into more than $2.35 million over the stock's 28-year history.
So, what happened?
The answer appears to be timing. Amazon benefited from a significant run-up in 2020. That year, stocks had bottomed in March as liquidity injections by the Fed led to the end of a brief bear market brought on by the pandemic. Investors responded by buying Amazon. Between the bottom in March 2020 and November, the stock was up by close to 90%, exceeding the performance in the recent five-year period.
However, by November 2020, the surge in Amazon stock began running out of steam. It traded in a range for most of 2021 before beginning what was ultimately a 50% decline the next year. Hence, all of its five-year gains occurred in 2023 and after.
Putting the state of the stock into perspective
Interestingly, the five-year snapshot is a case of bad timing and is likely not a signal that its growth is over.
For one, Amazon stock has outperformed the S&P 500 in both one-year and three-year periods, making the five-year performance a probable anomaly.
Furthermore, the attributes that drove Amazon stock higher over its decades-long history are largely in place. Indeed, online sales growth is in the single digits, and questions remain to this day whether it earns a profit.
NASDAQ: AMZN
Key Data Points
Nonetheless, that business supports fast-growing subscription, third-party seller, and advertising businesses. These enterprises are the likely reason why Amazon's two e-commerce segments report a positive operating income.
That also means that the majority of operating income comes from its cloud-oriented Amazon Web Services (AWS) segment. Even though AWS made up only 18% of net sales in the first three quarters of 2025, its operating margins have consistently exceeded 30%, far above the single-digit margins in the e-commerce segments.
Additionally, Grand View Research estimates a compound annual growth rate (CAGR) of 20% for the cloud computing industry through 2030, and a 19% CAGR for e-commerce. Those factors alone should mean that its growth for the next five years improves on that of the previous five.
