Over the past two decades, Amazon has consistently proven that innovation-driven companies can deliver extraordinary returns to investors. For those with patience and vision, Amazon stock (AMZN) has been a golden ticket—turning modest investments into life-changing fortunes. But the big question now is: can this journey continue?
Amazon was once seen primarily as an online retail juggernaut. However, its current business model extends far beyond that, encompassing high-margin verticals like cloud computing (AWS), digital advertising, logistics, streaming entertainment, and most recently, artificial intelligence (AI).
A major strategic shift has been Amazon’s growing focus on enabling third-party sellers to leverage its marketplace, rather than managing inventory and direct sales itself. In Q3 2023, revenue from third-party seller services surged 20%, compared to just 7% growth from Amazon’s own online store.
This pivot allows Amazon to reduce inventory burden, shift operational risks to sellers, and improve profitability without scaling up physical infrastructure. It’s a move widely applauded by shareholders.
Simultaneously, Amazon’s advertising business has flourished into a key revenue driver, now accounting for 8.4% of total revenue in Q3—making it Amazon’s fastest-growing segment with 26% year-over-year growth.
Gross margin is a crucial indicator of a company’s profitability. For Amazon, long associated with thin retail margins, recent improvements in this metric underscore the success of its business transformation.
According to YCharts, Amazon’s gross margin hit an all-time high in Q3 2023. Much of this improvement stems from Amazon Web Services (AWS), its cloud computing division, which remains the company’s most profitable arm. Coupled with strong advertising performance, Amazon is gradually transforming into a high-margin, tech-driven powerhouse.
CEO Andy Jassy has prioritized operational efficiency and disciplined cost management. These efforts are clearly paying off, boosting Amazon’s bottom line and positioning the company for stronger, more sustainable growth.
Surprisingly, Amazon’s price-to-sales (P/S) ratio remains around 2.7x—roughly the same level it traded at back in 2016. Back then, Amazon’s gross margin hovered around 10%. Today, it’s nearly doubled.
Many software companies, thanks to their high margins, trade at P/S multiples of 10 to 20. By comparison, Amazon—with growing profitability and robust free cash flow—appears undervalued.
The market has yet to fully reward Amazon’s shift to high-margin segments. But if the company maintains its profitability trajectory, investors may soon re-rate the stock more favorably.
It’s unlikely that Amazon will ever again turn $30,000 into $1 million as it did for early 2000s investors. But that doesn’t mean its days of generating wealth are over. In fact, Amazon is rapidly maturing into a well-rounded enterprise—scalable, profitable, and deeply embedded in multiple secular growth trends, including AI and cloud infrastructure.
Amazon Web Services now generates annual revenue nearing $92 billion. Yet global IT spending is still 90% concentrated on legacy, on-premise systems. This massive untapped opportunity positions AWS as a long-term growth engine.
In addition, Amazon’s strategic multi-billion-dollar deal with Anthropic—a leading AI startup—signals that the company is not sitting on the sidelines of the AI revolution. As part of the agreement, AWS becomes Anthropic’s primary cloud provider, and the startup will use Amazon-designed chips like Trainium and Inferentia to power its AI models.
According to CEO Andy Jassy, the synergy between AI and cloud will generate tens of billions in revenue for AWS in the coming years. When you layer generative AI applications on top of cloud infrastructure, the growth potential becomes exponential.
The key to investing success isn't buying at the absolute bottom—it's identifying companies with solid fundamentals, long-term tailwinds, and room for valuation expansion.
If you believe that AI, cloud computing, and e-commerce will continue driving the global economy, then Amazon represents a compelling all-in-one investment vehicle.
For investors with a long-term horizon, today’s Amazon stock offers both stability and upside. The company has proven its ability to reinvent itself, generate cash, and scale innovation. Over the next 5 to 10 years, Amazon could easily outperform index funds and become a cornerstone of a millionaire-making portfolio once again.
Tiếng Việt
English
