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If You Buy Amazon Stock Today, Will You Become A Millionaire By 2030?
To say that Amazon (NASDAQ: AMZN) has been a wildly successful investment would be putting it very lightly. The e-commerce, cloud computing, and digital advertising juggernaut's shares have catapulted 1,420% higher in the past decade (as of Jan. 30). Even in the past one-, three-, and five-year time frames, it has outperformed the Nasdaq Composite.
With those types of monster gains, there's no question that early investors have gotten wealthy from owning Amazon. But if you buy the "Magnificent Seven" stock today, will you become a millionaire by 2030?
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Durable growth
Investors are always drawn to businesses that report incredible growth. However, what separates Amazon is that its growth has proven to be durable, standing the test of time. Even with a sales base in the hundreds of billions of dollars, revenue was up 11% in third-quarter 2024 on a year-over-year basis. That figure was also 43% higher than in the same period three years before in 2019.
I'm optimistic that the top line is set to continue rising. That's because Amazon is riding some pretty powerful secular tailwinds that have been, and will keep, shaping our economy.
Cloud computing immediately comes to mind. Amazon Web Services (AWS) has top market share in the industry. Not only is it growing sales at a rapid clip, it's a major profit center for the company.
The advent of artificial intelligence (AI), particularly around the desire of many companies to implement this technology within their own operations, makes AWS' prospects even more exciting.
"The AWS team continues to make rapid progress in delivering AI capabilities for customers in building a substantial AI business," CEO Andy Jassy said on the Q3 2024 earnings call. "In the last 18 months, AWS has released nearly twice as many machine learning and gen AI features as the other leading cloud providers combined."
We can't forget about e-commerce, the activity that helped launch Amazon in the first place. To be clear, revenue here is not growing as fast as the overall business. But the company attracts nearly $4 out of every $10 spent online in the U.S., an unbelievable position. This gives it a huge advantage to capture a sizable portion of the industry's growth over time.
Some investors might not realize that Amazon has become a digital advertising powerhouse. With 3.8 billion visitors to amazon.com in December, there is plenty of attention to be monetized. Search intent provides valuable data for advertisers, and Prime Video introduces another channel to monetize with ads.
Don't expect too much
Thanks to the stock's monumental rise, especially since the start of 2023 (up 181%), investors need to take a closer look at the valuation. As of this writing, shares trade at a price-to-sales ratio of under 4.1. That's a 23% premium to the trailing 10-year average. And it's double the multiple from exactly two years ago.
Clearly, the market has become very optimistic about Amazon. This makes sense, given the company's stellar fundamental performance.
For some investors, though, that valuation might not be too much of a problem. Thanks to a combination of sales gains and cost controls, Amazon's operating income has been rocketing higher. Wall Street believes operating income will increase 21% in 2025 and 24% in 2026. That's a robust outlook.
But while there's still a chance forward returns could be strong, investors shouldn't expect monster gains in a five-year period. Even if you have high conviction that the stock can double by 2030, which would obviously be a great result, that means you'd need to invest $500,000 today in order to become a millionaire at the end of the decade.
Most people simply don't have anywhere close to that kind of cash lying around. With a much lower starting investment, Amazon won't help you achieve a seven-figure net worth by 2030.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $311,343!*
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of February 3, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
