Key Points
Amazon (NASDAQ: AMZN) saw its stock soar 15% after reporting second quarter earnings, signaling strong performance and growth potential. The company’s cloud computing division, Amazon Web Services (AWS), is a key driver, contributing 60% of Amazon’s profits despite accounting for just 21% of total sales. AWS revenue grew 37% year over year, with operating income increasing 64%, in stark contrast to Amazon’s North American and international divisions, which only experienced revenue growth of 16% and 15%, respectively.
CEO Andy Jassy posits that AWS could eventually reach $1 trillion in revenue, significantly boosting Amazon’s market cap. If AWS maintains a 39% operating margin, it could produce $391 billion in operating profit. This forecast would position AWS as a potentially $10 trillion business on its own, leading analysts to suggest that Amazon’s overall valuation could quintuple to $15 trillion if these ambitious goals are met.
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