Following the 2022 stock market correction, Amazon (NASDAQ:AMZN) shares reached their lowest point just as 2023 kicked off. Yet it hasn’t taken the e-commerce and cloud computing powerhouse to bounce back. Today, the shares are trading near an all-time high with a market-cap exceeding $2trn.
So how much money have investors made over the last two years?
Investors have almost tripled their money
On the last day of 2022, Amazon shares closed at a price of $84. Considering 12 months prior, the stock was priced closer to $166, 2022 was a brutal year for shareholders, with half of the firm’s valuation being wiped out. But as economic conditions improved, online shopping increased, and the AI-fuelled cloud spending frenzy, this business returned to ample growth. And today, the stock’s now trading near its 52-week high of $230 per share.
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That’s a 174% return in just two years! In terms of money, a £5,000 initial investment would now be worth £13,700. By comparison, the S&P 500‘s only up 62% over the same period, including dividends. This too is a pretty extraordinary performance. But compared to Amazon, it demonstrates the market-beating capabilities of a successful stock-picking strategy.
So the question now becomes are Amazon shares worth considering today?
The bull case
Amazon’s become a master in efficiency. And with its aggressive investments into AI and robotics, its fulfilment centres are becoming increasingly automated, resulting in an ever-increasing capacity to process next-day or even same-day deliveries.
Meanwhile, on the cloud-computing side of the business, Amazon’s also unleashing AI on its customers. Compared to its leading rivals like Microsoft Azure, AWS offers a broader range of integration options for AI models. That includes features such as serverless execution, facial analysis, object detection, text sentiment analysis, and even an AI sandbox for building, training, and deploying machine-learning models.
With that in mind, it isn’t surprising that Amazon’s beaten analyst earnings expectations every quarter since 2023 began. And it’s a trend that doesn’t seem to be slowing.
The bear case
As impressive as this company is, it still has its weak spots. Competition in e-commerce and AI are ramping up aggressively. Platforms like Shopify are making it far easier for businesses to create their own online storefronts. And thanks to its partnership with Flexport, even someone selling products out of their garage has access to two-day shipping logistics infrastructure.
Beyond competition, Amazon’s increasingly getting the attention and scrutiny of regulators worldwide. In fact, just last year, the company was sued by the Federal Trade Commission over allegations of behaving as an unlawful monopoly. And earlier this month, a new lawsuit emerged over alleged delivery discrimination to poorer regions of Washington DC.
The bottom line
Given the strength of leadership and long-term demand for e-commerce and cloud computing, I’m optimistic that Amazon has the potential to continue being a long-term winner, so is worthy of further research. It’s an opinion shared by many and explains why the stock trades at a premium valuation.
However, even if Amazon continues to succeed, its risks cannot be ignored. Neither can its share price volatility. As 2022 demonstrated, even one of the largest businesses in the world can still see its share price chopped in half.
