Amazon (NASDAQ:AMZN) stock had a tough year last year — or at least a tough year as far as Amazon is concerned. In the past 12 months, AMZN stock is up just 23%, and 13% of that is from the January rally. But bear in mind, in the past three years, AMZN stock is up 175%, so there’s no need to worry that Jeff Bezos is going to tumble off the list of the world’s richest people.
The one thing about being the top online retailer and the top cloud services provider is that you have laid the groundwork for competitors, since you have cut a proven path to success in these new sectors.
Can Anyone Catch AMZN Stock?
The trouble for the competition in the online world is, it’s a lot harder to catch a leader than it used to be in brick and mortar world.
Look at the search engine market back when the internet was young. There was a proliferation of companies with versions of search engines. And each was drawing a decent share of users. But few had the vision and single-minded focus of Google (now Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)).
And once Google gained traction the competition peeled away. One of the internet pioneers, AOL, now ranks No. 5 at about 0.06% of global users. Yahoo sits at No. 3 with about 3.9% market share.
Google has 81% market share. And it was this massive reach that helped it launch its massive advertising platform, which is also one of the most powerful online advertising businesses on the planet.
Amazon has done the same thing with online retail. It worked very hard to build out its product lines, pricing, etc from its humble online bookstore beginnings. It continued to plow all its money back into the business and build out it presence. Then, once it was generating solid revenue, it launched Amazon Web Services, or AWS — its cloud services business. And it became the leading cloud provider in the world.
What’s more, the cloud business has huge margins, unlike the online retail business. It was that money that helped fund AMZN’s other acquisitions.
At this point in time, we know that founder and CEO Jeff Bezos isn’t scared to try new opportunities and broaden the base of businesses and industries under the Amazon umbrella.
Certainly, AMZN’s move into new sectors has awoken the slumbering giants there — the big retailers, the entertainment companies, the grocery store chains.
But the fact is, Amazon is a true disruptor. Just by entering an industry, it forces corporate leaders there to start to rethink their business models. No longer is the status quo acceptable, because the Old Guard know, that if they don’t adapt, it will be AMZN stealing their market share, not vice versa.
And if there’s one thing to worry about, it isn’t who is going to catch Amazon, it’s who Amazon will catch next.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.