Should You Buy Amazon Stock, Even Though It Has Badly Underperformed the S&P 500 and Nasdaq-100 Since Jeff Bezos Stepped Down as CEO?

It has been astir 5 years since Amazon (NASDAQ: AMZN) laminitis and CEO Jeff Bezos stepped down from his relation arsenic CEO and handed implicit the reins to Andy Jassy.

Those 5 years were beauteous favorable for the banal market, but not truthful overmuch for Amazon stock.

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Amazon has posted an mean annualized instrumentality of conscionable 6.8% implicit the past fewer years. That not lone trails each of the different "Magnificent Seven" stocks, it's besides worse than the S&P 500 and the Nasdaq-100.

The S&P 500 averaged an 11.5% annualized instrumentality implicit that stretch, portion the Nasdaq-100 averaged a 14.2% return. The lone Magnificent Seven banal that came remotely adjacent to Amazon's underperformance was Microsoft (NASDAQ: MSFT). The others each averaged double-digit percent annualized returns.

Even this year, Amazon banal has lagged the S&P 500 -- the banal is up 7% twelvemonth to date, portion the scale is up 9% -- but it is beating respective of its magnificent brethren.

So wherefore has Amazon banal underperformed?

Losing marketplace stock

The tech elephantine hasn't navigated the AI roar arsenic good arsenic immoderate of its competitors. While Amazon Web Services (AWS) remains the world's largest unreality computing infrastructure provider, it has steadily mislaid marketplace stock to rivals Microsoft and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). In 2021, Amazon's unreality marketplace stock was astir 33%, but present it's down to astir 28%. Meanwhile, Microsoft and Alphabet's Google person gained marketplace share.

At the aforesaid time, Amazon has made monolithic investments successful AI information centers, but galore investors don't spot those investments paying disconnected good enough.

In its e-commerce business, maturation has slowed since the pandemic-era surge. Shoppers' displacement backmost toward mean retail behaviors initially near Amazon with an excess of inventory and shrinking margins. In much caller years, rising ostentation and costs person besides chopped into its margins.

So wherever does Amazon spell from here? Will the adjacent 5 years beryllium amended for Amazon and its investors than the past five?

An inflection constituent for Amazon?

Amazon banal is up 8% twelvemonth to day and up 14% implicit the past 12 months, but it inactive lags the S&P 500 implicit some clip frames.

However, its maturation numbers person improved. Jassy has besides repeatedly reminded investors that the company's dense spending connected AI infrastructure is needed to turn AWS. Last quarter, nett income for AWS accrued by 28% to astir $38 billion. That was higher than the 23% maturation complaint successful the 4th fourth oregon its 19% gait successful 2025.