Amazon (AMZN -0.32%) has certainly made early investors rich. The tech juggernaut's share price has rocketed 222,100% higher in the past 28 years. An investor that put just $451 in the business back at the initial public offering would see that balance worth $1 million right now. This is a much better gain than what the Nasdaq Composite Index produced.
However, investors who missed the boat have their sights on the future and what it could bring for their own portfolios. Can this "Magnificent Seven" stock be your ticket to becoming a millionaire by 2030?
Growth tailwinds
Jeff Bezos, Amazon's founder and former CEO, instituted a culture in which it's always "Day 1." This simply means that the business will never get complacent, always trying to push the needle to penetrate new markets and find ways to better serve customers. This continues to work wonders.
Unlike the vast majority of companies out there, Amazon has numerous growth engines propelling it. Yes, the business generated a colossal $620 billion in revenue in the last 12 months. But that figure is set to continue climbing higher.
Amazon is the leader in e-commerce, which still only commands a tiny share of overall retail spending. It has exposure to the streaming industry, benefiting from the cord-cutting trend with Prime Video. The company also has a booming digital advertising segment that saw sales jump 19% in Q3 on a year-over-year basis.
Then there's Amazon Web Services, which consistently puts up double-digit top-line growth. Increasing interest in cloud computing infrastructure, especially due to the rise of artificial intelligence, gives Amazon a powerful tailwind in the years ahead.
Expanding bottom line
Amazon has historically generated very low profits because it's always investing aggressively in new growth initiatives. Knowing that Amazon can stop spending in order to boost earnings at any point, the market has given the company a pass. Most other businesses aren't so fortunate.
In this instance, long-term shareholders should always want the management team to think about the next decade, as opposed to trying to hit some short-term financial targets. Nonetheless, Amazon has shown that it's still focused on driving efficiencies.
Earnings are on an impressive trajectory. Through the first nine months of 2024, Amazon generated $47.4 billion in operating income, which was more than double the same period the year before. Cost controls, particularly around right-sizing the workforce, have been a priority.
Wall Street sees the good times rolling. Consensus analyst estimates call for 2026 operating income to total $99 billion, triple the amount from 2023.
Millionaire by the end of the decade
Even after Amazon's historical performance, the stock doesn't look too expensive. It trades at a forward P/E ratio of 35.3. That might be a reasonable price to pay for a company that has a strong brand, network effects, and cost advantages, for example, that support its competitive position.
Given its growth potential, earnings trajectory, economic moat, and valuation today, I don't think it's a stretch to believe Amazon's stock can double over the next five years. This certainly makes it a worthy investment candidate that should be on your radar.
However, this also means that for new investors to become millionaires by 2030, a $500,000 investment would be required right now. Not many people have that kind of money sitting around, which likely implies that Amazon isn't a millionaire-maker stock this decade.
If you can extend your time horizon over the next couple decades or more, then perhaps this dominant business can get you in the seven-figure club. Just know that the stock's forward returns aren't going to resemble the monster gains of the past.
