I've Been Wrong About Amazon Stock for Almost 10 Years. Here's Why I'm Finally Changing My Mind.

For most of the last decade, I looked at Amazon (NASDAQ: AMZN) and thought, "Amazing business, but too messy for me as a shareholder."

I saw razor-thin retail margins, huge capital spending, and a company that seemed to reinvent itself every other year.

Now I find myself changing my mind, not because the stock has gone up, but because the underlying business looks very different than the one I kept passing on.

Image source: Getty Images.

The profit engine I underestimated

For years, I treated Amazon as just a retailer. That was my first mistake. Today, its own filings make it clear that the profit center is Amazon Web Services (AWS), not cardboard boxes. In 2025, AWS generated roughly mid-double-digit billions in operating income, far more than the retail segments, and did so with margins that look more like a software company than a store.

What changed my thinking was seeing that AWS is not a side hustle layered on top of e-commerce. It is the backbone of a huge part of the internet, with long contracts, deep integration, and economics that can fund a lot of experimentation elsewhere.

When I used to worry about Amazon's spending, I did not fully appreciate that a high-margin engine was quietly paying the bills.

A quiet advertising giant

The other blind spot for me was advertising. I always thought of ads as something that mattered for Alphabet and Meta, not Amazon. Then I started reading Amazon's own numbers and language around "advertising services" and "retail media." Earlier this year, Amazon disclosed more than $60 billion in annual ad revenue, growing at roughly 20% year over year and outpacing the core business.

That is not just banner clutter. It is brands that are paying for a front-row seat at the moment of purchase. Amazon sits where intent is strongest. The more I thought about that, the more I realized this might be one of the most durable profit streams for the company, built on shopper data and closed-loop measurement that is hard to replicate.

The logistics moat I used to see as a cost problem

My last hang-up was the warehouses, planes, and vans. I saw a cost monster. Over time, Amazon's history of its fulfillment and delivery network started to read differently. This is not just a way to move packages. It is an infrastructure grid that gets products closer to customers than most rivals can, and now supports third-party sellers, same-day delivery, groceries, and more.

There are still real risks: massive capital spending, regulatory scrutiny, and a business culture that demands constant reinvention. But after 10 years of standing on the sidelines, I now see a company whose profit mix has shifted toward AWS and advertising, with a logistics network that looks more like a moat than a burden. For me, that combination finally justifies owning Amazon as a long-term core holding, sized reasonably, instead of treating it as a great business I never quite trust enough to buy.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Meta Platforms. The Motley Fool has a disclosure policy.