Amazon Stock: No Longer Special?

Over the last two years, Amazon.Com (NASDAQ:AMZN) stock is up 89%.

An image of an Amazon logo on a building
Source: Jonathan Weiss /

Sounds great? The NASDAQ average is up almost the same amount.

In the case of Amazon, this has brought the market cap of $1.76 trillion as trading started September 10. It has made co-founder Jeff Bezos the world’s richest man, at $201 billion. It has made his ex-wife, MacKenzie Scott, one of the world’s great philanthropists, worth $58.6 billion. 

But Amazon is not beating alpha. It hasn’t beaten the market. It has just kept up.

Business Can’t Be Better for AMZN Stock

While stock market returns on Amazon haven’t been stellar, business has been great.

For the June quarter Amazon grew its sales by 29%, at scale. Net income was up 47% from the previous year. Don’t tell The New York Times, but Amazon is now as much a service as a product company. Some $55 billion of June quarter revenue came from services, against $58 billion from products.

The most important service is the AWS cloud, which brought in $10.8 billion during the second quarter. That’s 32% of the cloud market, as much as Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) combined. Amazon’s cloud is also profitable. Google’s cloud operations continue to lose money as it tries to buy share in a market growing at nearly 41% per year.

Amazon Prime Video now has 16% of its market and 200 million members around the world. In the last year I’ve seen Prime shows from Russia, India, South America, and Spain, as well as the U.S. (The Russian version of Sherlock Holmes, from 2013, was particularly fine.)

Amazon is so big one of its third-party sellers, Packable, is now going public through a Special Purpose Acquisition Company (SPAC). Another third-party seller, Thrasio, is looking for a $10 billion IPO.

Third-party sellers aren’t exclusive. Unlike those in China, who were often tied to giants like Alibaba Group Holding (NASDAQ:BABA) through contracts, American re-sellers can sell through Walmart (NYSE:WMT), eBay (NASDAQ:EBAY), or their own sites. This makes it harder for trustbusters like Lina Khan to bust up the company. Amazon only has half of the commerce market it created.

Dark Clouds for AMZN Stock?

Nevertheless, trustbusters and regulators have investors doubting how fast Amazon can grow from here. California’s legislature is pushing a bill that would regulate the labor practices at Amazon warehouses. Amazon drew some black eyes while beating an effort to unionize an Alabama warehouse.

Regulators are even examining AWS contracts for signs of self-dealing.

During 2021, Amazon’s stock price has bounced around. You could get it for $3,200 in August. It was back to $3,500 on September 10. It briefly topped $3,800 in July, around its annual Prime Day promotion. The promotion will be part of its third quarter report, due October 28. Analysts are expecting earnings of $8.72/share and revenue of $112 billion. 

Overall, however, Amazon stock’s 2021 performance is badly trailing the NASDAQ in 2021. The shares are up just 7%, the average 18.6%. Bezos’ space ambitions, and Scott’s philanthropy, are holding down the stock.

The Bottom Line

Andy Jassy, now in his third month as Amazon’s CEO, has yet to show his hand.

After Tim Cook became Apple (NASDAQ:AAPL) CEO a decade ago his first moves were to make the company more shareholder-friendly. He instituted a dividend, split the stock, and bought back shares. He also followed Amazon into the clouds and took greater control of his supply chain, with Apple designing its own chips.

Amazon is doing some of that, working on its own chips and sub-systems for AWS. It’s going to make its delivery fleet all-electric through Rivian. It’s trying to follow SpaceX into satellite-based wireless.

But for the most part Jassy has yet to show his hand. What shareholders should know is that the hand is filled with aces. Don’t worry about Amazon’s stock price. Buy it on any weakness and hold on for dear life.

On the date of publication, Dana Blankenhorn held long positions in AAPL, BABA, MSFT and AMZN. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.

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