How Has Amazon’s Stock Performance Been Shaking Out?

AWS will ensure Amazon’s top line and bottom line growth

Earlier, we discussed that despite increased competition, Amazon (AMZN) is a leading player in the retail and cloud spaces. Amazon’s timely acquisitions have ensured that it has a presence in diverse areas, giving it an edge over its peers.

However, investors are more keen on revenue and earnings growth than they are on acquisitions. On the revenue front, Amazon is expected to grow more than its peers, as we discussed earlier in the series.

How Has Amazon’s Stock Performance Been Shaking Out?

With an annual run rate of $27.1 billion in the first quarter, AWS (Amazon Web Services) is an extremely profitable offering for Amazon. Its operating margin has expanded from 20% in 2015 to more than 25% in the first quarter, as reported by AWS has ensured Amazon’s dominance in the overall cloud space. Considering the expansion in its operating margin, it’s very likely AWS will contribute significantly to Amazon’s bottom line.

Amazon stock has grown more than five times in the last five years

Let’s see whether Amazon’s growth is reflected in its stock performance. Currently trading at $1,699–$1,700, Amazon stock has surged 78% in the past year, bringing its current market cap to ~$805 billion. In the last five years, its stock has surged close to five times, from $286 per share in early July 2013 to its current level of $1,700 per share.

To date in 2018, Amazon stock has risen 43%. In the past year and to date in 2018, the S&P 500 Index (SPY) has risen 12% and 1%, respectively. Thus, Amazon has significantly outperformed the S&P 500 Index on both fronts.