Amazon (AMZN) Stock for the Next 10 Years: Buy, Hold, or Avoid?

Amazon's stock has seen a remarkable 534% increase over the last ten years, but investors are wondering if the company's stock still has upside potential in the coming decade. While Amazon generates its revenue primarily from e-commerce, its cloud platform, Amazon Web Services (AWS), contributes the majority of its operating profits.

Over the past decade, AWS's annual revenue has skyrocketed from $7.9 billion to $128.8 billion, and its operating margin has expanded from 19.2% to 35.4%. This growth has allowed Amazon to expand its Prime ecosystem by offering discounts, hardware devices, streaming media services, and other loss-leading strategies. With over 200 million Prime subscribers worldwide, Amazon enjoys a significant competitive advantage against other retailers.

AWS also hosts tens of millions of websites and apps, helping developers build and train new generative AI apps on platforms like Bedrock and SageMaker. Amazon is also investing in its own AI accelerators and owns a substantial stake in Anthropic, an AI company slated to go public in 2026. These AI-driven catalysts, combined with Amazon's expansion into higher-growth overseas markets and its higher-margin advertising business, could fuel its earnings growth over the next decade.

However, Amazon's expansion will come at a cost, as the company anticipates its capital expenditures to reach $220 billion in 2026, up from $131.8 billion in 2025, and is expected to increase further in 2027. This increased spending, along with competition from other hyperscalers, could put pressure on AWS margins. Moreover, competition from other hyperscalers could make it more challenging for Amazon to grow its lower-margin retail business.

Rising interest rates will also increase the cost of expanding Amazon's AI infrastructure, potentially reducing demand for its cloud services and compressing its valuation. Inflation, driven by factors such as the Iran war and unpredictable tariffs from the Trump Administration, could further stifle the growth of its retail business, including the Whole Foods segment.

The author initially invested in Amazon in early 2016 and has held the stock since then, expecting it to remain a cornerstone investment in the booming e-commerce, cloud, AI, and digital advertising markets. If Amazon meets analysts' estimates through 2028, grows its earnings per share at a 15% compound annual growth rate (CAGR) through 2036, and maintains a valuation of 25 times its current year's earnings, its stock could more than quadruple to nearly $1,120 over the next decade.

Despite the potential volatility, the author plans to continue holding Amazon as their top position, accounting for nearly 10% of their portfolio, for the foreseeable future.