In 1995, Amazon opened its first online bookstore, becoming an e-commerce pioneer. It has since parlayed its first-mover status into a more formidable competitive edge. Fueled by its Prime membership program and expansive logistics network, Amazon will power nearly 40% of U.S. e-commerce sales this year, according to eMarketer. That means it has more market share than the next 14 retailers combined.
Amazon has also come to dominate the cloud computing industry. In 2021, research company Gartner recognized Amazon Web Services (AWS) as the leading provider of cloud infrastructure services, citing a greater ability to execute and a more complete vision than any other vendor. In turn, AWS captured 32% market share in the fourth quarter, according to Canalys, putting the company 11 percentage points ahead of second-place rival Microsoft Azure.
Collectively, Amazon's strong competitive position across multiple industries has translated into impressive financial results. Revenue rose 22% to $470 billion in 2021, and the company posted a profit under generally accepted accounting principles (GAAP) of $64.81 per diluted share, up 55%. But this tech giant still has room to expand its empire.
E-commerce and cloud computing are still quickly growing industries, and Amazon is gaining ground in digital advertising. In fact, it captured 11.6% market share in the U.S. digital ad space last year, up from 7.8% in 2019. That figure is expected to reach 14.6% by 2023. For context, eMarketer believes U.S. digital ad spend will hit $270 billion by 2023, putting Amazon in front of another massive market opportunity. That's why this stock looks like a smart long-term investment.
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