Amazon just turned 30, and it has made a lot of money for investors over the years.
Amazon (NASDAQ:AMZN) turned 30 last week. Few could have imagined when it was founded in 1994 that it would grow to become one of the largest companies in the world, with Amazon stock surging to almost $2,500 per share before it split in 2022.
At the time, the Internet was somewhat of a novelty, as was the concept of buying things online. These were the wild-west days of the internet, amid the dotcom boom, so it was hard to know which companies would win.
But there was no bigger winner than Amazon. As such, those investors who had the luck, patience, foresight or all of the above to invest in Amazon stock over the years have made a lot of money.
Here’s how much you’d have now if you had bought $5,000 of Amazon stock in 2014.
A leader in two markets
The reason why Amazon has been so dominant over the years is because it is a leader in two entirely different markets. There are few companies that can make that boast.
The obvious one is the e-commerce business. Amazon pretty much invented e-commerce when it launched, and it remains by far the dominant player.
At the end of 2023, it held 37.6% market share in e-commerce, while the next closest competitor, Walmart (NYSE:WMT), had only 6.4% market share.
In the cloud computing segment, its lead is not as large, but it is still the market leader with about 31% market share. Microsoft (NASDAQ:MSFT) has eaten into its lead and is now second at 25% market share while Alphabet (NASDAQ:GOOG) is a distant third with 11% market share.
Microsoft has been leading the way in adapting AI functionality into its cloud computing business, but Amazon recently announced that it is making a $100 billion investment in its AI infrastructure to maintain its lead.
These are two dynamic, growing industries that Amazon is investing heavily in. Amazon is well-positioned in both and should continue to generate robust growth.
If you invested $5K in Amazon stock 10 years ago
As previously stated, Amazon was trading at around $2,500 per share in 2022 before its massive 20-for-one stock split, which brought the share price down to roughly $120 per share.
Amazon underwent three other stock splits, all in 1999 when the dotcom boom was in full effect.
So, if you invested $5,000 in Amazon 10 years ago, the split-adjusted share price would have been about $16.40 per share as of July 10, 2014. The $5,000 investment would have bought you about 305 shares.
With the split-adjusted price now at $200 per share, that initial $5,000 investment would see a 10-year total return of 1,120% and an average annualized return of 28.6%.
Based on that growth rate, the initial $5,000 would have turned into roughly $62,000. But what if you invested in Amazon when it went public in 1997?
From $5K to $8.2 million
Amazon stock went public on May 15, 1997, at roughly $18 per share. Of course, it’s been through four stock splits since then, so you have to factor that in when calculating its return.
For the purpose of this hypothetical, the split-adjusted price back on May 15, 1997, would have been 10 cents per share.
So, if you invested $5,000 in Amazon 27 years ago when Amazon went public, your investment would have grown by 31% on an average annualized basis and now been worth about $8.2 million.
At age 30, Amazon is still going strong, with a lot of growth ahead of it.
