Why Amazon Stock Still Looks Like a Long-Term Winner

Neil Patel, The Motley Fool

Mon, Jun 9, 2025, 5:30 AM 4 min read

Key Points

Amazon should register solid revenue gains in the years ahead, thanks to multiple tailwinds pushing it forward.
AWS will continue to be a growth and profit engine for the business.
With earnings set to keep rising, the current valuation looks compelling.
10 stocks we like better than Amazon ›

Amazon (NASDAQ: AMZN) has been one of the best investments anyone could've made. In the past 20 years, shares have catapulted 11,270% higher (as of June 3). A $10,000 investment would've turned into more than $1.1 million today. That's life-changing wealth.

As of this writing, this "Magnificent Seven" stock trades 15% off its peak from early February. Now might be a great time to add this dominant enterprise to your portfolio. Here's why Amazon shares still look like a long-term winner.

Person pulling package out of Amazon locker. — Image source: Amazon.

Amazon has numerous avenues for growth

Investors prefer to own companies that exhibit solid growth, thanks to the presence of a powerful secular trend. Amazon stands out above the crowd because it has multiple tailwinds working to its benefit.

We all know about the massive online marketplace, which makes Amazon a leader in the e-commerce niche of the broader retail sector. According to data from the Federal Reserve Bank of St. Louis, physical shopping in the U.S. still represents 84% of the industry, providing Amazon with a durable opportunity to capture in the decades ahead.

Amazon Prime membership is estimated to have 220 million subscribers worldwide, providing recurring and predictable revenue for the business. People can buy items with fast and free delivery, get savings on gas, and watch shows and movies. Consequently, the rising popularity of streaming entertainment should make Prime a compelling service for more people.

Advertising might fly under the radar, but that should change. In the first quarter, digital advertising contributed $13.9 billion to Amazon's revenue. That sales figure increased 19% year over year. Amazon.com counted 2.6 billion visitors in April, so there's plenty of attention that can be monetized.

Amazon also has a budding presence within healthcare. Amazon One Medical is a primary care service offering in-person and telehealth appointments to patients. There's also Amazon Pharmacy, which can deliver medications at discounted prices.

AWS has become a high-powered business

One important secular trend that hasn't been mentioned here yet is cloud computing, a market poised to register fantastic growth going forward. CEO Andy Jassy says that 85% of IT spending is still on-site, which introduces a truly massive opportunity as these companies shift to off-premises and take advantage of the cloud.

Enter Amazon Web Services (AWS), which continues to be a significant growth engine, reporting a 17% revenue gain in Q1. In the past 12 months, AWS raked in a whopping $112 billion in sales, making it the leader in the global cloud market.

It's also bolstering the bottom line. Operating income came in at $11.5 billion for AWS during Q1, translating to a remarkable operating margin of 39.5%. It has required substantial investments to get to this point, but now AWS can leverage its expense structure to generate sizable profits.

With AWS, Amazon also has a critical platform to launch various artificial intelligence (AI) tools for its customers. "Generative AI is going to reinvent virtually every customer experience we know, and enable altogether new ones about which we've only fantasized," Jassy said.

Valuation and earnings create upside

While Amazon certainly proves that it's a wonderful company, it's important for investors to look at the stock's valuation as well. If you pay too much, no matter how great a business it is, returns going forward can disappoint.

Amazon shares trade at a forward price-to-earnings (P/E) ratio of 33.3. On the surface, this doesn't exactly look like a bargain. However, when you realize that net income soared 77% between 2021 and 2024, and that the analyst community sees earnings per share rising 62% from 2024 to 2027, it's easy to be bullish.

Amazon has been a fantastic stock to own in the past, and it can still be a long-term winner in the future.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

Why Amazon Stock Still Looks Like a Long-Term Winner was originally published by The Motley Fool

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