Amazon's Decade-Long Growth Streak Continues with AWS Driving Expansion

Billionaire Peter Thiel's hedge fund, Thiel Macro, disclosed its portfolio last month, revealing Amazon as its largest reported position worth around $118 million. However, the notable aspect is not the current stake but rather the company's impressive growth over the past decade.

Investing $10,000 in Amazon shares back in September 2016 would have yielded approximately $66,000 today, representing a return of about 555% or nearly 21% annualized. This remarkable gain is solely due to price appreciation, as Amazon does not pay dividends.

The company's transformation can be attributed primarily to the growth of its cloud computing segment, Amazon Web Services (AWS). In 2016, AWS generated $12.2 billion in revenue and $3.1 billion in operating income, accounting for most of the company's overall operating profit. By 2025, AWS' revenue had increased more than tenfold to $128.7 billion, with its operating income reaching $45.6 billion.

Amazon is continuing to invest heavily in AI infrastructure, leading to a free cash flow outflow of about $7.6 billion over the trailing 12 months. While this may seem alarming, it's essential for future growth and mirrors the investment strategy behind AWS' development.