How Has Amazon Stock Done for Investors?

Amazon (NASDAQ: AMZN) has generally served as a market stalwart since it launched its IPO in 1997. The company pioneered e-commerce in the U.S. and much of the developed world and later spawned the cloud computing industry as a side effect of its efforts to make e-commerce more widely available.

Consequently, it is one of the largest and most respected stocks on the market today, and its place among the so-called "Magnificent Seven" stocks cements that legacy. Nonetheless, investors may struggle with what to make of its five-year performance. Here's why.

Image source: Amazon.

Amazon over the last five years

Over the past five years, Amazon's stock price rose 44%, well below the S&P 500's approximate 86% return. This may come as a surprise to investors, as it has turned a $1,000 investment into more than $2.35 million over the stock's 28-year history.

So, what happened?

The answer appears to be timing. Amazon benefited from a significant run-up in 2020. That year, stocks had bottomed in March as liquidity injections by the Fed led to the end of a brief bear market brought on by the pandemic. Investors responded by buying Amazon. Between the bottom in March 2020 and November, the stock was up by close to 90%, exceeding the performance in the recent five-year period.

However, by November 2020, the surge in Amazon stock began running out of steam. It traded in a range for most of 2021 before beginning what was ultimately a 50% decline the next year. Hence, all of its five-year gains occurred in 2023 and after.

Putting the state of the stock into perspective

Interestingly, the five-year snapshot is a case of bad timing and is likely not a signal that its growth is over.

For one, Amazon stock has outperformed the S&P 500 in both one-year and three-year periods, making the five-year performance a probable anomaly.

Furthermore, the attributes that drove Amazon stock higher over its decades-long history are largely in place. Indeed, online sales growth is in the single digits, and questions remain to this day whether it earns a profit.

Nonetheless, that business supports fast-growing subscription, third-party seller, and advertising businesses. These enterprises are the likely reason why Amazon's two e-commerce segments report a positive operating income.

That also means that the majority of operating income comes from its cloud-oriented Amazon Web Services (AWS) segment. Even though AWS made up only 18% of net sales in the first three quarters of 2025, its operating margins have consistently exceeded 30%, far above the single-digit margins in the e-commerce segments.

Additionally, Grand View Research estimates a compound annual growth rate (CAGR) of 20% for the cloud computing industry through 2030, and a 19% CAGR for e-commerce. Those factors alone should mean that its growth for the next five years improves on that of the previous five.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.