Peter Thiel’s Hedge Fund Investment in Amazon
Billionaire Peter Thiel’s hedge fund, Thiel Macro, recently disclosed its portfolio, revealing that its largest investment is in Amazon, valued at approximately $118 million as of June 30. The fund’s interest in Amazon is reflected by the company’s remarkable stock performance over the past decade.
Historical Performance
In September 2016, Amazon shares closed at a split-adjusted price of $39.44. Recently, the stock traded around $258.51, meaning a hypothetical $10,000 investment back then would now be worth about $66,000 — a staggering return of 555%, or nearly 21% annually, without any dividends.
Company Growth
The Amazon of 2016 generated $136 billion in revenue and only $2.4 billion in net income. By 2025, revenue soared to around $717 billion, with net income exploding to $77.7 billion, indicating the company’s profits grew faster than its stock price.
The Power of AWS
A significant factor driving Amazon’s success is its cloud computing service, Amazon Web Services (AWS). In 2016, AWS generated $12.2 billion in revenue, climbing to $128.7 billion by 2025. The operating income from AWS increased significantly, demonstrating a scaling effect that improved profit margins over time.
AWS continues to grow, with revenue up 20% year-over-year in 2025 and a notable acceleration in growth in recent quarters. Additionally, Amazon’s advertising sector emerged as another strong revenue stream, showing impressive growth rates.
Future Outlook
While achieving another 555% gain in the coming decade might be unrealistic, as it would elevate Amazon’s market value to approximately $18 trillion, steady profit compounding can still lead to shareholder rewards.
Despite recent high spending, particularly in AI infrastructure, which resulted in a cash flow outflow, the firm’s investment strategy mirrors past practices that led to AWS’s success.
Conclusion
Investing in Amazon may still be worthwhile, bolstered by its robust business model and future growth potential. However, potential investors should not expect past performance to repeat. The company appears stronger now, and a price-to-earning ratio of about 24 for next year’s expectations seems justified given its growth trajectory.
