It may be hard to imagine, but Amazon (NASDAQ:AMZN) began as an online bookseller just 30 years ago. Today, the site sells a wide range of goods. The business has grown rapidly to include the popular subscription service Amazon Prime, electronic devices, and Amazon Web Services (AWS).

The stocks have also created a lot of wealth for investors. Investors who bought and held stocks a decade ago have seen gains of almost 1,000%.

Outperform the market

Amazon went public in 1997 and had annual sales of around $148 million at the time. Last year, that value rose to almost $575 billion.

But you didn’t have to buy the shares at the IPO price to make a lot of money. Over the last decade, Amazon shares have gained 945% in value, far exceeding the S&P500227% total return.

Even if you started with a relatively small $1,000 10 years ago, you would have about $10,500 today. If you invested the same amount in the S&P 500, you would have ended up with about $3,300.

Amazon stock will likely struggle to deliver returns like that over the next decade, but that doesn’t mean it’s not worth investing in.

The price-earnings ratio (P/E) of Amazon shares is 39, significantly higher than 27 times the S&P 500. This suggests that the market has high expectations for Amazon’s growth.

The AWS cloud computing business remains the company’s biggest profit generator. The division’s revenue rose 18.6% to $26.3 billion last quarter, and operating profit rose to $9.3 billion from $5.4 billion. AWS also has the highest operating margin of 36.5% of all three of the company’s business units. The outlook is good given enterprise demand for data, and the push into artificial intelligence could give the business a further boost.

However, given the relatively high valuation, you may want to take advantage of dollar cost averaging to buy shares over a longer period of time. This way, you invest small amounts at regular intervals and don’t have to worry about timing the market correctly.

Should you invest $1,000 in Amazon now?

Before you buy Amazon stock, consider the following:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lawrence Rothman, CFA, does not own any of the stocks mentioned. The Motley Fool owns a position in Amazon and recommends the company. The Motley Fool has a disclosure policy.

If you invested $1,000 in Amazon stock 10 years ago, this is how much you’d have today. Originally published by The Motley Fool