So why else should you feel comfortable holding Amazon for the long haul? In short, this web giant is about much more than just retail. With its Kindle segment, for instance, by selling the physical devices at near-cost, Amazon is intelligently building a pipeline of high-margin electronic goods which should pay massive dividends down the road.
In addition, Amazon boasts an industry-leading cloud computing solution its Web Services business, which currently handles web traffic for hundreds of companies and organizations around the world including NASA, Netflix, Inc. (NASDAQ:NFLX), Lions Gate Entertainment Corp. (USA) (NYSE:LGF), Yelp Inc (NYSE:YELP), and Pinterest.
While the $1.5 billion in revenue from Amazon Web Services represented a relatively small chunk of the company’s overall revenue in 2012, IT research firm Gartner, Inc. (NYSE:IT) recently estimated cloud computing should nearly double to represent a $206 billion industry by 2016. Meanwhile, despite stiff competition from the likes of fellow cloud computing titans International Business Machines Corp. (NYSE:IBM) and Rackspace Hosting, Inc. (NYSE:RAX), Amazon should continue to benefit from the overall trend as the wider market grows.
Equally as important, Amazon CEO Jeff Bezos is a master of eloquently crafting investor expectations and, like Weeks, consistently refuses to manage his company around Wall Street’s fickle quarterly demands. To be sure, in his letter to shareholders when Amazon went public in 1997, Bezos wrote, “We believe that a fundamental measure of our success will be the shareholder value we create over the long term.” Later, he expressed hope investors could share his vision and elaborated to say “We are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about.”
To the patient investors go the spoils
I don’t know about you, but I’d love to tell my grandchildren about fortunes made buying shares of Corning and Amazon.com in early 2013.
While their valuations remain worlds apart, both companies possess enormous competitive moats and rightly focus on creating long-term value for shareholders. All things considered, there’s no reason they can’t both survive and thrive for at least the next fifty years.
The article 2 Stocks for the Next 50 Years originally appeared on Fool.com and is written by Steve Symington.
Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Corning, Netflix, and Rackspace Hosting (NYSE:RAX). The Motley Fool owns shares of Amazon.com, Corning, International Business (NYSE:IBM) Machines, and Netflix.
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