Amazon's Cloud Computing Arm Set to Drive Stock Price Growth

Amazon's stock has been a top performer over the years, but what does its future hold? If you had invested $10,000 in Amazon exactly 25 years ago and held on to it, your position would be worth over $6 million today. However, looking forward, it's estimated that a $10,000 investment by the end of 2030 could be worth significantly more.

According to estimates, Amazon's cloud computing wing, Amazon Web Services (AWS), will continue to drive growth for the company. AWS already accounts for about 21% of Amazon's total revenue and has operating margins that are vastly superior to those of its commerce units. Over time, this will lead to AWS accounting for an even larger share of Amazon's total operating profits.

If we estimate that AWS will grow at an annualized rate of 30% between now and the end of 2030, it could reach revenue of $483 billion that year. With a 39% operating margin, this would result in operating profits of $190 billion. In comparison, Amazon's total operating income over the past 12 months was $93.7 billion.

Using these estimates, even if the valuation ratio falls to 25 times operating income, Amazon could achieve a market cap of $6.5 trillion by the end of 2030. This would result in a potential stock price of $600 per share, turning a $10,000 investment today into more than $23,000 by the end of 2030.