The investor optimism about Amazon is, in many respects, unchanged from when it went public in 1997.
Amazon remains a long-term play based on a wager that online shopping will replace a healthy chunk of traditional retail over time. Even with all of Amazon’s staggering growth — $136 billion in revenue last year, compared with $148 million in 1997 — e-commerce still represents only around 10 percent of total retail spending in the United States, the company’s most mature market.
That leaves Amazon — which accounted for 43 cents of every dollar spent online in the United States last year, according to Slice Intelligence — with a lot of room to grow. Some analysts say its gains could be especially large in the coming years as more physical retailers close stores and file for bankruptcy.
“For any stock analyst trying to find growth and return on investment in the retail sector today, they’re clearly putting money into Amazon because that’s where they anticipate the growth coming from,” said Cooper Smith, an analyst at L2, a retail research firm.
Ty Rogers, an Amazon spokesman, declined to comment. The stock closed at $996.70 on Tuesday, up 0.09 percent.
Amazon has also given investors reason to believe it is not content to remain simply an e-commerce giant. Through its Amazon Web Services business, it is now the largest provider of cloud computing services in the world. It stands to benefit for many years as hundreds of billions of dollars in information technology spending shifts from traditional purchases of hardware and software to effectively renting them in the data centers.
Because profit margins in cloud computing are wider than those in the retail business, Amazon, which had only a passing familiarity with profits over most of its life, is now consistently in the black.
After an embarrassing smartphone venture, Amazon demonstrated that it, too, could stay ahead of important changes in consumer technology with the invention of Echo, a voice-activated speaker powered by an artificially intelligent assistant called Alexa. Although the company says little about sales of the devices, other than that tens of millions have been sold, Alexa appears to be emerging as a significant new technology platform, and Amazon’s strategy is being widely imitated by rivals.
One of those rivals, Alphabet, is not too far behind Amazon in chasing the $1,000 a share milestone (the market capitalization of Alphabet, which is far more profitable than Amazon, is still about $200 billion higher than that of the internet retailer).
The most powerful technology companies are becoming even more powerful. Of course, that is no guarantee of staying power. Apple and Microsoft, much older than Amazon, each lost its way for a time. And tech pioneers like Hewlett-Packard, which split into two companies two years ago, and IBM have struggled to adapt to technology changes.
Amazon is known for being ruthlessly competitive on prices for products it sells on its website, but that does not extend to its share price. Last week at the company’s annual investor meeting in Seattle, a woman who said she was a longtime Amazon shareholder beseeched Mr. Bezos to split the company’s stock to help make it more accessible to less wealthy investors.
Mr. Bezos said Amazon considered such possibilities from time to time but had no plans for a split.