Amazon has helped make millionaires in the past.
Amazon (AMZN -0.68%) has become a giant in two high-growth markets — e-commerce and cloud computing — over the years, growing earnings into the billions of dollars. The company’s share price has followed, proving itself as a top long-term investment as it’s likely helped make many people millionaires. The stock has advanced more than 1,000% over the past decade, for example, meaning that those who held on over time won big.
In 2022, Amazon even completed a stock split as its shares soared past $3,000. Today it’s one of the world’s biggest companies, with a market value of $1.9 trillion. All of this is positive, but after such successes, it’s reasonable to wonder about what Amazon may accomplish down the road. Are the company’s best days in the past, or could this hot stock still help you become a millionaire? Let’s find out.
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Amazon’s earnings growth
First, a brief look into the past. Amazon has become the go-to destination for many of us when we shop for food or general merchandise online, and the company’s Amazon Web Services (AWS) is the No. 1 cloud services provider worldwide. In the most recent quarter, this resulted in a 13% increase in sales to more than $143 billion and a tripling of net income to more than $10 billion. And this quarter isn’t an exception. Amazon’s earnings generally have grown over the past several years.
The one exception happened in 2022, when higher inflation weighed heavily on the company, resulting in the first annual loss in about a decade. But this dark cloud has a silver lining, and that comes in the form of Amazon’s work on its cost structure — an effort that spurred recovery and should boost Amazon’s earnings in better times too.
The company cut jobs, streamlined operations, and targeted key areas of improvement such as fulfillment. For example, Amazon shifted its fulfillment network from a national model to a regional one, and this has already lowered the company’s cost to serve. At the same time, this allows Amazon to offer the lowest prices possible on items — which keeps customers coming back — and still make a profit.
As for AWS, this business has driven profit at Amazon year after year and has generally delivered double-digit growth in revenue and operating income. AWS has maintained its leadership as the world’s biggest cloud provider and continues to invest in infrastructure to stay ahead. For example, AWS plans to launch new infrastructure regions in Saudi Arabia and Mexico, representing investments of more than $5 billion in each country over the coming years.
A focus on artificial intelligence
So, clearly, Amazon has reached positions of strength in these two big businesses. Could the growth keep on going? Yes, and Amazon’s focus on artificial intelligence (AI) may be a big part of the next growth chapter. The company is using this technology to improve e-commerce operations and gain in efficiency, and this results in cost savings. One example is Amazon’s use of AI to determine the best delivery routes — a shorter, faster route from warehouse to doorstep equals lower costs for the company and pleases customers too.
But where Amazon may have the most to gain from AI is in its AWS business. The cloud giant sells many services to AI customers, with the goal of covering all of their needs — from simple chips to a fully managed service that allows them to customize popular large language models to suit their needs. Amazon has already demonstrated the monetization potential of its AI investment, with AWS reaching an annual revenue run rate of $100 billion. So, AI could be a major growth driver for AWS and the entire company moving forward.
Now let’s get back to our question: Could Amazon help you become a millionaire? Alone, Amazon couldn’t do the job unless you invested an enormous amount in the stock right now. But, along with a diversified portfolio of solid companies, Amazon could help you become a millionaire over time. Yes, the stock has advanced in the quadruple digits over the years, but thanks to its leadership in e-commerce and cloud and its investment in the hot growth area of AI, there’s plenty of room for this top stock to run. And that’s why it’s still a great addition to your millionaire-maker portfolio.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.