Amazon.com (AMZN)'s Long-Term Outperformance Highlights the Risks of Paying Premium Valuations

JB Global Capital, an investment firm, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. During Q4 2025, JB Global Capital reported an 8.9% decline, largely driven by a sharp drop in Alibaba, its largest holding, while global markets posted modest gains. Despite the quarter’s setback, the fund delivered a strong full-year return of 67.5% and stands at 108.9% since inception, outperforming major benchmarks. The letter explains that 2025 market gains were heavily concentrated in a small group of mega-cap tech companies, which the fund largely avoids due to valuation discipline. However, the managers remain focused on fundamentals and believe this approach will benefit long-term performance as market leadership shifts. Additionally, please check the fund’s top five holdings to know its best picks in 2025.

Amazon.com, Inc. (NASDAQ:AMZN) is widely regarded as one of the most successful businesses built in the past three decades, having transformed global retail and repeatedly proven skeptics wrong. However, Amazon.com, Inc. (NASDAQ:AMZN) also illustrates the risk of overpaying for excellence. Investors who bought the stock at its 2000 peak waited nearly a decade to break even, and returns over the first 15 years lagged Treasury bonds, despite the company’s undeniable competitive advantages. The lesson is clear: even when the business performs exceptionally well, entry price matters, and paying premium valuations can still lead to years of underperformance. The one-month return of Amazon.com, Inc. (NASDAQ:AMZN) was approximately +5.01%, and its shares gained about 7.91% over the last 52 weeks. On January 14, 2026, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at approximately $236.71 per share, with a market capitalization of about $2.545 trillion.

JB Global Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2025 investor letter:

"Amazon.com, Inc. (NASDAQ:AMZN) illustrates this dynamic perfectly. The company is arguably the best business built in the past 30 years, transforming retail, proving naysayers wrong at every turn, and creating shareholder value that exceeded even the wildest bull cases from 1999. Yet if you bought Amazon at its 2000 peak, you had to wait nearly a decade just to break even, and your returns over the first 15 years underperformed Treasury bonds. The business was excellent; the entry price was terrible. Everything the bulls said about Amazon’s competitive advantages proved correct—and investors who overpaid still underperformed for years."

Amazon.com, Inc. (NASDAQ:AMZN) is in the 1st position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 286 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the third quarter, which was 308 in the previous quarter. While we acknowledge the risk and potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Amazon.com, Inc. (NASDAQ:AMZN) and shared the list of stocks that were discussed by Jim Cramer. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.