Want to hear a staggering number? Here it is: 208,300%. That’s roughly the gain that Amazon (NASDAQ: AMZN) has delivered since its initial public offering (IPO) on May 15, 1997. If you had invested $10,000 in the stock back then and held on for the wild ride, you’d have a whopping $20.8 million today.
Amazon won’t be able to generate the kind of sizzling growth in the future as it did when the company was still a rising star. However, that doesn’t mean this stock can’t still make investors a lot of money. I predict Amazon could surge by 100% (or more) in the next five years.
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Image source: Amazon.
Been there, done that
Delivering a 100% return in five years isn’t covering new ground for Amazon. The stock has done it several times in the past.
Most recently, Amazon’s share price soared roughly 137% between 2020 and 2024. Notably, this big gain came despite a steep sell-off in 2022 as the Federal Reserve rapidly raised interest rates.
AMZN data by YCharts.
Some five-year periods have been even more impressive. Between 2015 and 2019, Amazon’s share price increased by nearly 500%.
AMZN data by YCharts.
Granted, past performance isn’t necessarily indicative of future performance. But I think history might rhyme, if not repeat itself, for Amazon.
How Amazon could double or more by 2030
My prediction about Amazon surging 100% or more in the next five years wasn’t just plucked out of the air. I believe there are five specific reasons why the stock could deliver such a lofty return.
First, Amazon is still around 15% below its previous high. Every such pullback in the past has offered a great buying opportunity for long-term investors. I suspect this one will be, too.
Second (and on a related note), Amazon’s valuation is as attractive as it’s been in years. The stock currently trades at a trailing-12-month price-to-earnings (P/E) ratio of around 33. That might seem pricey, but it’s the lowest earnings multiple for Amazon since the market meltdown of 2008.
AMZN PE Ratio data by YCharts.
Third, Amazon Web Services (AWS) should have tremendous growth prospects over the next few years. I don’t foresee the generative AI tailwind waning anytime soon. As the largest cloud service provider in the world, AWS is poised to capture a significant chunk of the market as organizations move their IT spending to the cloud to build and deploy generative AI models.
Fourth, despite Amazon’s amazing success in e-commerce, it still has a lot of room to grow. CEO Andy Jassy noted in the company’s October 2024 quarterly call that Amazon only has around a 1% market share of the global retail market. He believes that retail will steadily shift from physical stores to online over the next 10 to 20 years. I agree with Jassy and view e-commerce as a continued major growth driver for Amazon.
Fifth, I expect Amazon to keep churning out incremental growth by expanding into new markets. The company is doing this today with its Project Kuiper satellite launches and introduction of new healthcare services.
What could derail this prediction?
Although I genuinely believe Amazon stock could double or more over the next five years, I readily admit that I could be wrong. What could derail my prediction? I’ll mention two threats that especially stand out.
A prolonged global economic decline would make it much more difficult for Amazon to generate a 100% return by 2030. The Trump administration’s relaxation of trade tensions with China could reduce the likelihood of a recession. However, significant uncertainty remains.
Should organizations fail to realize solid returns from their investment in generative AI, AWS’ growth could suffer and prevent Amazon stock from fulfilling my prediction. I think it’s more likely that generative AI will pay off handsomely, but I won’t rule out the possibility that return on investments (ROIs) could be less than desired.
The trickiest part of my prediction is the timing. It’s difficult to accurately predict how any stock will perform over five years. In my opinion, though, if any stock has what it takes to jump 100% by 2030, it’s Amazon.
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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. Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
