Amazon’s stock has already delivered impressive gains, rising over 150% from $85 levels in early 2023 to around $210 now. But what could propel the stock to double from current levels over the next few years? The answer lies in AWS and AI – the primary growth engine for Amazon.
AWS remains Amazon’s most lucrative segment and the key catalyst for future stock appreciation. AWS revenue growth of 19% year-over-year in 2024 and 17% in Q1’25 was strong, and it is expected to remain in high teens in the near term. The artificial intelligence boom is driving accelerated demand for cloud computing services, with enterprises turning to AWS to leverage AI capabilities quickly. Separately, if you are looking for an upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception. Also, see – Should You Buy RKLB Stock At $33?
Amazon is making a significant investment in its AI infrastructure. In 2024, the company spent approximately $75 billion on capital expenditures, and CEO Andy Jassy expects this to exceed $100 billion in 2025. This substantial investment is largely driven by the increasing demands of generative AI.
Recently, Amazon further underscored its commitment by announcing plans to invest $54 billion in the UK over the next three years. This investment aims to expand both its warehouse network and artificial intelligence infrastructure, bolstering its e-commerce and cloud operations.
AWS revenue reached $108 billion in 2024, representing 17% of Amazon’s total revenues. However, the segment’s high margins establish it as Amazon’s primary profit driver. Continued double-digit growth in AWS could significantly increase the company’s overall valuation. For perspective, AWS alone accounted for an estimated 40% of Amazon’s total EBITDA in 2024. Wondering about Amazon’s profitability, check out – Amazon Operating Income Comparison and Amazon Operating Cash Flow Comparison
How Does Amazon Benefit From These Investments?
Amazon’s AI investments create a multiplier effect across all business segments. In e-commerce, AI will help enhance recommendation engines, optimize logistics networks, and improve inventory management, driving higher conversion rates and operational efficiency.
For advertising, AI will likely enable more precise targeting and dynamic pricing, increasing ad effectiveness and commanding premium rates. These cross-segment AI benefits compound revenue growth while reducing operational costs, creating a virtuous cycle of scaling revenues and expanding margins.
Revenue Acceleration
Amazon’s advertising business has become a significant revenue generator, hitting $56.2 billion in 2024, marking its first time exceeding $50 billion annually. This was a 20% increase year-over-year. The strong momentum continued into Q1 2025, with advertising revenue reaching $13.9 billion, a 19% increase compared to the previous year.
Amazon’s unique position as both a marketplace and a media platform gives its advertising business a significant advantage. The recent introduction of ads on Prime Video has expanded ad inventory, while the company’s extensive e-commerce data offers powerful targeting capabilities for advertisers.
While attention often focuses on AWS and advertising, Amazon’s foundational e-commerce business remains a substantial revenue source. Last year, the online stores segment brought in $247 billion in annual revenue, accounting for 39% of Amazon’s total business. This strong base provides consistent cash flow, enabling Amazon to fund growth investments in its higher-margin segments like AWS and advertising.
Path To 2x Growth
For Amazon’s stock to double, the company needs to show consistent growth across its key businesses. This growth will likely be fueled by AWS’s AI-driven expansion, the rapid increase in advertising revenue, and the stability of its e-commerce operations.
Key factors that could drive stock appreciation include AWS consistently growing above 20%, advertising revenue reaching $80-90 billion annually (expected within 2-3 years), and improved operating margins as AI investments start paying off. Amazon’s substantial AI infrastructure investments strategically position it to capture a significant share of the emerging AI market.
Looking at the numbers, we project Amazon’s revenues to exceed $900 billion in the next three years, with earnings nearly doubling from 2024 to over $10 per share. Currently, with AMZN stock trading around $210, it’s valued at approximately 39 times trailing earnings. If it maintains a similar valuation, the stock could surpass $400 within the next three years. Should investors assign an even higher multiple, it would imply more than a two-fold growth. Also see – Amazon’s Valuation Ratios Comparison
Amazon’s diverse revenue streams and leadership in cloud computing, e-commerce, and digital advertising offer multiple avenues for sustained growth. This revaluation, coupled with fundamental business growth, provides the basis for the stock to double, reflecting sustained revenue increases and a reassessment of Amazon’s long-term earnings potential in the AI economy. Amazon’s diversified revenue streams and leadership in cloud computing, e-commerce, and digital advertising provide multiple pathways for sustained growth. If these segments continue their current trajectories, the stock could potentially double from here, driven by both revenue growth and margin expansion as AI investments mature.
The convergence of scaling revenues across all segments and improving profitability from AI-driven efficiencies could fuel significant investor optimism. As Amazon demonstrates its ability to monetize massive AI investments while maintaining market leadership, investors may assign premium valuation multiples typically reserved for high-growth technology companies. This multiple expansion, combined with fundamental business growth, provides the mathematical foundation for the stock to double—requiring both sustained revenue increases and a revaluation of Amazon’s long-term earnings potential in the AI economy.
Potential Risks to Growth
While Amazon’s pathway looks promising, several factors could hinder the stock from doubling. Intensifying competition in cloud computing from Microsoft Azure and Google Cloud, for example, could put pressure on AWS’s margins and growth rates.
Furthermore, regulatory scrutiny over Amazon’s market dominance, especially in e-commerce and advertising, might lead to antitrust actions. These could limit expansion or even force business restructuring. Google and Meta are already facing the heat. The company’s massive AI capital expenditures also carry execution risk; if these investments don’t deliver expected returns or take too long to materialize, investor sentiment could turn negative.
Additionally, economic downturns could reduce enterprise cloud spending and consumer e-commerce activity. Elevated interest rates could also make high-growth stocks like Amazon less appealing compared to fixed-income alternatives. Overall, investors willing to bet on Amazon should take into account these risks as well.
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