- Amazon’s future growth potential is often underestimated due to its size, but its unique position in leading growth industries sets it apart.
- Amazon’s online store, 3P sales, advertising, subscriptions, and AWS segments all contribute to its potential $4 trillion valuation by 2030.
- A sum-of-the-parts valuation approach projects steady growth and profitability across all segments, supporting a ‘Strong Buy’ rating for Amazon stock.
Introduction
I’m not revealing anything new when I say that Amazon.com, Inc. (NASDAQ:AMZN) is a giant in the business world and that its growth story has been impressive. However, in today’s article, I’m not here to talk about its past but its future. There is a widespread opinion in the market that when a company is already very large, its growth possibilities are limited. While this is true to some extent (obviously, it is impossible for Amazon to grow perpetually at 30% as in a few years it would surpass the global GDP), I think this limitation is often overestimated, and it is believed that companies the size of Amazon cannot generate value at an attractive enough rate.
Companies like Amazon or Microsoft Corporation (MSFT) are not only well-established giants, but are also the main drivers of the industries with the most significant projections for the coming years. This is something that has happened very few times in history; neither Cisco Systems, Inc. (CSCO) nor Exxon Mobil Corporation (XOM) nor many others that have been the world’s largest companies, have been able to lead new growth industries in addition to the mature markets they already control. The FAAMG companies are a unique case in history and should be valued as such. As Amazon’s own motto says, “It’s still Day 1.”
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