Businesses that can increase their revenues and earnings at high rates over long stretches of time make for wonderful investments. You might think that these opportunities only come from smaller and earlier-stage companies. That's not true: At least one magnificent tech enterprise looks like it fits that description.
If you're ready to invest $100,000, it could be a good idea to buy this unstoppable growth stock now, before its market cap hits $3 trillion.
Image source: Amazon.
Sustainable growth supported by multiple tailwinds
Investors should pay close attention to Amazon (AMZN 1.58%). Its cloud platform, Amazon Web Services, continues to be a critical growth engine, benefiting from customers' robust interest in its artificial intelligence tools and features. Management has said it expects its capital expenditures to total $125 billion this year as it rushes to build out its data center capacity so that it can capture more of the available demand.
Online shopping is another secular trend pushing its business forward. Other retailers simply can't compete with the massive product selection Amazon offers or the finely tuned logistics network it has built. The fast and free shipping it offers supports an exceptional user experience that drives new sign-ups for Prime memberships and keeps established members resubscribing, gradually expanding the Amazon ecosystem.
The digital advertising industry has long been dominated by Alphabet and Meta Platforms. However, Amazon is rapidly rising up the ranks, having collected $65 billion in digital ad revenues in the past 12 months. Amazon is clearly providing value to marketers, giving it another tailwind as the overall digital ad market keeps expanding.
NASDAQ: AMZN
Key Data Points
A $3 trillion market cap could happen sooner than you think
Amazon's current market cap is about $2.4 trillion. To get to the $3 trillion mark -- a milestone only four companies have reached -- that figure would need to rise by 25%. It's entirely possible that Amazon will achieve this over the next 12 months, if history is any indication.
In the past 20 years, the stock has rocketed 9,140% higher (as of Dec. 19), making it one of the best investments of recent decades. However, it's only up 4% this year, and its current enterprise-value-to-earnings-before-interest-and-taxes ratio of 31 is near a 10-year low. Therefore, investors could benefit from valuation expansion.
Analysts' consensus estimates are for operating income to increase 26% between 2025 and 2026. With strong financial results like this possibly on tap, the market should start to appreciate this business more. That would create a favorable backdrop that could push the stock price higher in short order.
