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Amazon’s growth is set to continue thanks to its position in the e-commerce and digital ad industries.
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Cloud computing and artificial intelligence might be the most important aspects of the business today.
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Investors must understand that Amazon stock’s price-to-earnings ratio might be inflated.
Getting to its current market cap of $2.6 trillion means that Amazon (NASDAQ: AMZN) has been a tremendous holding for long-term investors. Over the past decade, for example, the company’s shares have rocketed 715% higher (as of Jan. 9). There is no question that this is one of the most dominant businesses we’ve ever seen.
It’s time to adopt a perspective that looks out to the next 10 years. Should investors buy, hold, or avoid this top tech stock?
Even though this is a gigantic enterprise, I believe Amazon is a smart stock to buy today. One clear reason why is because the company’s growth seems far from finished. In addition to rising e-commerce penetration, the business is seeing remarkable gains in its digital ad efforts. Ad sales surged 22% in the third quarter of 2025.
We can’t forget about cloud computing, a market where Amazon Web Services (AWS) holds a strong position. Andy Jassy, the company’s CEO, estimates 85% of IT spending has yet to move to the cloud. And there’s the heightened interest from AWS customers to work with artificial intelligence (AI) tools.
“Customers want to be running their core and AI workloads in AWS given its stronger functionality, security, and operational performance,” he said on the Q3 2025 earnings call.
It’s also been great to see the business focus more on operational efficiencies in recent years. Analysts forecast operating income of $79.9 billion in 2025. That would be 249% higher than five years ago in 2020.
Investors should have no complaints about Amazon’s impressive position in the various markets that it serves. However, one obvious knock could be the valuation, at least when looking at the price-to-earnings ratio of 35. This doesn’t look cheap when compared to the 25.7 multiple of the S&P 500. Given the quality of the company, though, that valuation might be justified.
It’s important to realize that Amazon’s strategy isn’t to maximize its ability to report high profit figures in any period. The business is known to aggressively invest in new initiatives, products, and industries as it continues to grow. This means that Amazon’s true earnings power is likely greater than what the company’s SEC filings show.
What matters for investors looking at the next decade is whether Amazon’s revenue and profits will be higher in 2036. It’s almost impossible to think that they won’t be, thanks to the previously mentioned growth tailwinds, as well as the company’s wide economic moat that stem from network effects and scale advantages (to name just two). This stock is still worth buying.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
Amazon Stock for the Next 10 Years: Buy, Hold, or Avoid? was originally published by The Motley Fool
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