As of June 2024, Amazon.com, Inc. has a market cap of $1.9 trillion, making it the world’s most valuable company by market cap. Market capitalization, commonly called market cap, is the total market value of a publicly traded company’s outstanding shares and is commonly used to measure the company’s worth.
Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions through online and physical stores in North America and internationally. The company operates through three main segments: North America, International, and Amazon Web Services (AWS). Its products offered through its stores include merchandise and content purchased for resale, as well as products from third-party sellers. The company also manufactures and sells electronic devices such as Kindle, Fire tablets, Fire TVs, Rings, Blink, eero, and Echo, and develops media content. Additionally, it offers programs for sellers to sell their products on its platform and programs that allow content creators to publish and sell content. The company also provides various services, including computing, storage, database, analytics, machine learning, fulfillment, advertising, and digital content subscriptions. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.
Amazon’s success is evident from its historical performance. If you had invested $1,000 in Amazon stock 20 years ago, it would be worth approximately $90,500 today, representing an annualized total return of 25.3%, significantly higher than the S&P 500’s annualized total return of 10.3% over the same period. This is attributed to its dominance in e-commerce, cloud-based services, and artificial intelligence and its significant presence in both the digital and analog worlds.
The company continues to outperform the broader market with its advertising business and e-commerce segment. AWS, Amazon’s cloud platform, generated 61% of operating income in Q1 2024 despite representing only 17% of Amazon’s total sales. Improved financial performance is observed, with $15.3 billion operating income in Q1 2024, marking a 219% increase year over year.
Investors seeking a growth stock with a reasonable valuation could consider Amazon. It currently trades at a price-to-sales ratio of 3.4, in line with its trailing five-year average. Given its multiple growth drivers and improving financial performance, Amazon remains an attractive investment opportunity for long-term investors.
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