This article was updated on Oct. 16, 2017, and originally published on May 24, 2017.
From its start as an online bookseller to its position as the world's largest e-commerce company today, Amazon.com (AMZN -2.42%) has charted an incredible course. A longtime outperformer, it has consistently trounced the market throughout the past decade.
Of course, that historical analysis doesn't tell investors much about Amazon's current return-on-investment potential, so here's a snapshot of the state of affairs at the Seattle-based tech titan:
| Recent Price Per Share | Market Capitalization | P/E |
| $1,002.94 | $481.7 billion | 255.1 |
Data source: Yahoo! Finance. P/E = price-to-earnings ratio.
So how can you get your hands on some Amazon.com shares? First, you'll need to know how to open a brokerage account, as well as how to buy a stock. The Motley Fool's guides on both topics are required reading before you proceed further. But once you've absorbed the basics, you'll still want to understand the e-commerce giant's business outlook before you hit the "buy" button.
How Amazon got here
Amazon's rise to the top of the corporate world is the stuff of business lore. Founded in 1994, Amazon conducted its IPO just two years later in one of the hallmark moments of the original dot-com frenzy. It opened its first fulfillment center in 1997, and it began expanding internationally in 1998 with U.K. and German e-commerce sites. The next several years saw Amazon largely focus on expanding its number of available products, its fulfillment infrastructure, and its geographic reach.
These combined efforts served as the rocket fuel that propelled Amazon's breakneck growth. In 1999, Amazon sales surpassed the $1 billion mark for the first time. Its top-line figure eclipsed $10 billion in 2006. Profits were slower to appear during this phase of its corporate life, as Amazon ruthlessly competed on price to gain market share, but it's been free-cash-flow-positive since the early 2000s.
The late 2000s also saw the company usher in several important innovations. In 2006, it launched Amazon Web Services (AWS) for public usage, a move that helped ignite the cloud-computing revolution. In 2007, it rolled out the Kindle, which presaged Amazon's shift into digital media. Then it launched its Netflix competitor, Amazon Prime Video, in 2011.
The combined effects of these innovations -- and others too numerous to list -- have been nothing short of incredible. In 2016, Amazon's sales and profit totaled $135.9 billion and $2.3 billion, respectively. Better still for investors today, Amazon is in many senses just beginning to seize its long-term market opportunity.
Image source: Amazon. An Amazon fulfillment center.
The future is bright for Amazon
For most companies, reaching a market cap that exceeds $100 billion coincides with a gradual shift into maturity. However, that's not the case at Amazon, largely due to the sheer size of the multiple markets it's disrupting.
First, the e-commerce revolution is just entering its adolescence. To illustrate this point, I typically point to two sets of figures:
- E-commerce accounted for only 8.3% of all U.S. retail sales in Q4 2016.
- E-commerce also accounted for only 8.7% of worldwide retail sales in 2016.
Considering the global retail market totaled $22 trillion in 2016, the long-term runway for Amazon to continue to expand its market share and sales seems considerable, particularly given its unique vision for vertically integrating large swaths of the global consumer-goods supply chain. Its summer 2017 acquisition of Whole Foods Markets was perhaps the most concrete example of this strategy to date.
Turning to the cloud, AWS enjoys an equally robust long-term growth runway. In 2016, AWS sales reached $12.2 billion, which represents just a fraction of what analysts estimate spending will be on public cloud services in the years ahead. For example, research firm IDC forecasts that this market will reach $141 billion in sales by 2019. Because of its lucrative nature -- AWS produced a 25% operating margin in 2016 -- some analysts suggest that this business unit alone was worth as much as $150 billion last year.
Long story short: Amazon could become much more immense than it already is -- so long as it maintains its innovative edge, and right now that edge shows no signs of growing dull. For all these reasons and more, Amazon remains one of the best large-cap tech growth stocks for investors to own today.
