Amazon’s AWS Drives Investment Thesis
Amazon Web Services (AWS) recorded Q2 sales of $30.9 billion, marking a 17% increase. Although this growth is slower than competitors like Microsoft Azure and Google Cloud, both exceeding 30%, AWS remains pivotal, accounting for 18% of Amazon’s total revenue and 53% of its operating profit. AWS’s profitability stems from high margins, reinforcing its importance in Amazon’s financial strategy.
Billionaire Steve Mandel reduced his Microsoft investment by 5% during Q2, reallocating funds to Amazon—a stock that has appreciated nearly 800% over the last decade. Analysts suggest Amazon’s long-term growth potential outpaces Microsoft’s, with profits expected to increase at a faster rate despite both companies having similar valuations.
Both Amazon and Microsoft are considered strong bets in the AI sector, yet Amazon’s margin improvement due to AWS and advertising services suggests a more promising trajectory for investors.
