Amazon Stock: Path To 2x Growth
Amazon’s stock has already posted strong gains, climbing over 150% from $85 in early 2023 to about $210 currently. What could potentially cause the stock to double from this point in the coming years? The key drivers are AWS and AI – the core growth pillars for Amazon.
AWS remains Amazon’s most profitable segment and the primary lever for future stock gains. With AWS revenue growing 19% year-over-year in 2024 and 17% in Q1’25, momentum remains strong, and growth is projected to stay in the high teens in the near term. The artificial intelligence surge is accelerating demand for cloud services, as enterprises increasingly rely on AWS to deploy AI applications. Separately, if you’re looking for a steadier path to gains than investing in a single stock, explore the High Quality portfolio, which has outpaced the S&P and returned over 91% since inception. Also, see – Should You Buy RKLB Stock At $33?
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Amazon is making large-scale investments in AI infrastructure. In 2024, the company allocated roughly $75 billion in capital expenditures, with CEO Andy Jassy projecting this to exceed $100 billion in 2025. These sizable investments are primarily driven by the rising demands of generative AI.
The company recently reinforced its AI focus by announcing a $54 billion investment in the UK over the next three years. This will enhance both its warehouse footprint and AI infrastructure, strengthening its e-commerce and cloud operations.
In 2024, AWS generated $108 billion in revenue, representing 17% of Amazon’s total top line. Thanks to its high margins, AWS remains Amazon’s top profit contributor. Sustained double-digit growth in AWS could significantly lift the company’s valuation. For context, AWS contributed an estimated 40% of Amazon’s total EBITDA in 2024.
How Does Amazon Benefit From These Investments?
Amazon’s AI investments have a ripple effect across its operations. In e-commerce, AI can improve product recommendations, streamline logistics, and optimize inventory, enhancing conversion rates and operational efficiency.
In advertising, AI enables better audience targeting and dynamic pricing, increasing ad effectiveness and boosting revenue. These AI-driven enhancements across divisions support top-line growth while lowering costs, creating a flywheel of expanding revenue and margins.
Revenue Acceleration
Amazon’s advertising segment has become a major revenue contributor, reaching $56.2 billion in 2024 – the first time it has crossed the $50 billion annual threshold. This represented a 20% year-over-year increase. The strength continued into Q1 2025, with ad revenue hitting $13.9 billion, up 19% from the prior year.
Amazon’s dual role as a retail and media platform gives its ad business a distinct edge. The recent introduction of ads on Prime Video has expanded inventory, while rich e-commerce data enables precise audience targeting for advertisers.
Despite focus on AWS and ads, Amazon’s core e-commerce unit remains vital. In 2024, its online store segment generated $247 billion, or 39% of total revenue. This solid foundation provides reliable cash flow to fund growth in higher-margin areas like AWS and advertising.
Path To 2x Growth
For Amazon’s stock to double, the company must sustain growth in its primary segments. AWS’s AI-powered expansion, surging ad revenue, and the steady e-commerce base are key growth engines.
Critical growth drivers include AWS maintaining 20%+ growth, ad revenue climbing to $80–90 billion within 2–3 years, and improving margins as AI investments begin to yield returns. Amazon’s massive AI infrastructure buildout puts it in a strong position to lead in the evolving AI space.
Projections show Amazon’s revenue could top $900 billion within three years, with earnings doubling to over $10 per share from 2024 levels. With AMZN trading at roughly $210 today, it reflects a 39x multiple on trailing adjusted earnings. Sustaining this multiple could send the stock beyond $400 in that time. A higher multiple would support an even larger gain.
Amazon’s breadth across cloud, retail, and advertising provides multiple growth paths. Combined with margin expansion from AI, this could justify a significant valuation increase. If current business trends continue, a doubling of the stock is plausible.
The combination of rising revenue and AI-driven efficiency improvements could bolster investor sentiment. If Amazon executes on monetizing its AI investments while preserving its leadership, the market may award it premium multiples typical of high-growth tech firms. Together, this multiple expansion and business growth form a logical basis for the stock to double—anchored in both increased earnings and valuation re-rating in the AI era.
Potential Risks to Growth
Despite a promising outlook, various risks could stall Amazon’s growth trajectory. Intensifying competition from Microsoft Azure and Google Cloud may impact AWS’s pricing power and market share.
Additionally, growing regulatory scrutiny over Amazon’s dominance in e-commerce and digital ads could result in antitrust challenges. Similar regulatory pressure is already facing Google and Meta. There’s also execution risk – if Amazon’s significant AI investments fail to generate expected returns or face delays, it may erode investor confidence.
Macroeconomic headwinds, such as a slowdown in enterprise IT spending or reduced consumer demand, could also impact Amazon’s cloud and retail businesses. Higher interest rates could make growth stocks like Amazon less attractive relative to fixed-income investments. Thus, investors eyeing Amazon should weigh these risks carefully.
At Trefis, we account for such risks in constructing the High Quality (HQ) Portfolio, which includes 30 stocks and has consistently outperformed the S&P 500 over the past four years. What’s behind that outperformance? HQ Portfolio constituents tend to deliver higher returns with lower volatility than the benchmark, as seen in HQ Portfolio performance metrics.
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