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Amazon’s Growth and Future Valuation
Amazon’s AI services revenue is experiencing triple-digit growth, supported by its cloud computing division, AWS, which is valued at $120 billion, outpacing Microsoft’s $75 billion Azure and Alphabet’s $50 billion Google Cloud. To accommodate rising demand, Amazon plans to spend over $100 billion on capital expenditures in 2025. Currently, its market cap is around $2.3 trillion, positioning it for potential entry into the $3 trillion club by generating $60 billion in free cash flow by 2027.
In the second quarter, Amazon’s retail business, which remains a significant contributor to profitability, saw a 12% increase in paid units with only a 6% rise in shipping costs. The advertising business also posted a 22% year-over-year revenue growth, helping lift the North American operating margin to 7.5%, up 190 basis points from the previous year. These factors are expected to drive future profitability and support Amazon’s long-term financial strategy.
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