The Next Amazon: Your Chance to Make 100X Gains

Amazon (NASDAQ:AMZN) stock delivered 1,000% gains to long-term investors. If you want to repeat this success, this is your best chance.

| More on:

Want to find the next Amazon (NASDAQ:AMZN)? If you do, you could make 1,000% gains, or even more.

This isn’t an easy task. If it were, everyone would be rich. You need to be willing to think outside the box, understand the fundamentals, and make a bet early.

This is what makes Amazon

Do you want to find the next big thing? You first must understand what made the last big thing possible.

“If you don’t understand a company’s goals, how can you know what its strategies and tactics will be?” Ben Thompson, a highly respected tech analyst, asked. “Unfortunately, many companies, particularly the most ambitious, aren’t as explicit as you might like.”

A lot has been written about Amazon’s success, but the company itself hasn’t been super revealing. It’s not like Jeff Bezos tweets out his strategy on a daily basis.

The key is to not think of the company as being involved in any of its end markets. Yes, Amazon Fresh delivers groceries, but it’s not a grocer. Amazon sells books, but don’t think of it as a bookstore. Instead, understand this company for what it truly is: a service provider.

“Unlike Whole Foods Amazon has no particular desire to be a grocer, and contrary to conventional wisdom the company is not even a retailer,” stressed Thompson. “At its core Amazon is a service provider enabled — and protected — by scale.”

How to make huge gains

Most investors think about Amazon in terms of end markets. Smart investors think of it as a service provider. More specifically, the company is a tech service provider.

By using its e-commerce technology, millions of buyers and sellers can aggregate onto a single marketplace. As more buyers shop there, more sellers are attracted, which in turn brings in more buyers. It’s a virtuous cycle — one that produces huge gains for decades at a time.

This is what most people fail to understand about Amazon: the bigger it gets, the more powerful it becomes.

To find the next Amazon, you need to identify a business like this. Shopify (TSX:SHOP)(NYSE:SHOP) fits the model perfectly.

This stock is on fire

Since going public five years ago, Shopify stock has risen 40 times in value. What’s the secret?

Like Amazon, Shopify is a service provider of e-commerce technology. Whereas Amazon is an aggregator, Shopify is a platform.

Aggregators bring all relevant parties to one place. Platforms allow others to build on top of the technology. On the surface, these are different websites, but on the backend, everything is powered by the Shopify platform.

When you buy through Amazon, you know you’re shopping at Amazon. But when you buy through Shopify, you often have no idea, as the marketplace is custom-branded by the individual store. If Amazon is the digital Walmart, Shopify is the independent store down the block. But instead of owning the store, Shopify gets a cut of sales across the one million stores it enables.

Shopify should eventually reach Amazon’s current size, suggesting shares could rise another 20 times in value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Shopify, and Shopify and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Tech Stocks

A shopper makes purchases from an online store.
Tech Stocks

1 Canadian Stock Down 28% That’s Pure Long-Term Gold

If there's one strong stock investors should consider, it has to be this top notch tech stock making a comeback.

Read more »

investment research
Tech Stocks

Best Stock to Buy Right Now: Shopify vs Constellation Software

Let's look at two top Canadian growth stocks and determine which may be the better pick for long-term investors right…

Read more »

3 colorful arrows racing straight up on a black background.
Tech Stocks

1 Canadian Tech Stock Poised for Big Growth in 2025

This Canadian tech stock is one that remains undervalued, so what's next for investors?

Read more »

Canadian dollars in a magnifying glass
Tech Stocks

Billionaires Are Selling NVIDIA Stock and Buying This TSX Stock in Bulk

Forget the tech stocks going through ups and downs and stick to this solid tech stock instead.

Read more »

A person uses and AI chat bot
Tech Stocks

Missed Out on Alphabet Stock? My Favourite AI Stock to Buy and Hold

There are some stocks out there that are popular, and some offer major deals on the market today.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 Bright Canadian AI Stock Ready to Surge in 2025 and Beyond

Don't run away from tech stocks, this AI stock could surge this year and beyond.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

An AI Giant Hiding in Plain Sight: Why Wall Street Is Missing Shopify’s Tech Edge

Shopify (TSX:SHOP) stock is a top Canadian AI play that could break out to new highs in 2025.

Read more »

Abstract Human Skull representing AI
Tech Stocks

Step Aside, Nvidia: This AI Stock Is the Real Deal for Canadian Investors

Canada has several tech companies pivoting to AI, which isn't the same as pure-breed AI stocks, but that's not necessarily…

Read more »