Amazon shares have gained 20% this month, including a big spike last week following the company’s second-quarter earnings report. (Amazon posted a surprise profit and showed that its early investment in cloud computing was very smart.)
While shareholders’ reaction to Amazon’s unique profitability strategy isn’t always unconditional excitement, it has proven an excellent long-term investment.
If you had bought Amazon shares on March 10, 2000—the day the Nasdaq peaked before the dot-com crash—you still would have returned about eight times your original investment. That far outpaces eBay, another internet veteran; Yahoo, which is now mostly valued for its investments in Alibaba and Yahoo Japan; and the S&P 500. (Hat tip to Bernstein analyst Carlos Kirjner for publishing a similar chart in a research report earlier this year.)
But, of course, the real long-term technology investment to make at the peak of the bubble would have been Apple.
With Steve Jobs back in control, its historic comeback was just getting started—the iMac existed, but the iPod hadn’t been unveiled yet, and the iPhone hadn’t been invented. And your investment would have been in the red for a while. But by now, the return would be about 30 times the money.