As the first quarter of 2024 inches towards its close, Amazon’s stock (NASDAQ: AMZN) has already surged by almost 20% since the beginning of the year. Hovering near its all-time high, this upward trajectory may seem extraordinary to some, but for seasoned Amazon observers, this ascent comes as no surprise.

For nearly thirty years since its initial public offering, one financial indicator has emerged as a rock-solid harbinger of Amazon’s stock performance. It’s not the flashy revenue growth that steals the show, but rather the humble operating income, the unsung hero that holds the key to understanding Amazon’s stock movements.

Unveiling the Crucial Chart for Amazon Investors

While revenue growth indeed garners attention, investors fix their gaze on Amazon’s core operational strength – its operating income. This figure excludes extraneous expenses to offer an unvarnished view of the company’s profitability.

Here’s the kicker: Amazon’s stock price dances in tandem with its operating income, a correlation that resonates loud and clear in the 20-year chart displayed below. The graphic paints a compelling story, one that investors ignore at their peril.

AMZN data by YCharts

The symbiotic relationship between Amazon’s operating income and stock price was vividly underscored in the recent past. When Amazon’s operating income plummeted by 51% in 2022, its stock mirrored the decline with a 50% drop. Fast-forward to 2023, and a 202% surge in operating income catapulted the stock price by a staggering 81%.

The meteoric rise in Amazon’s operating income owes much to its crown jewel, Amazon Web Services (AWS), which has emerged as the primary engine driving the company’s financial performance over the past decade. In 2013, AWS posted modest net sales of $3.1 billion. By 2023, this figure had soared to $90.8 billion, marking a breathtaking nearly 30-fold surge.

Foretelling the Future: A Glimpse into Amazon’s Profit Trajectory

Peering into Amazon’s crystal ball, the management’s prophetic guidance for the forthcoming quarter’s operating income offers a tantalizing glimpse into the company’s financial landscape. Anticipated to range between $8 billion and $12 billion, this forecast, despite its breadth, heralds positive tidings.

An 67% surge in year-over-year operating income beckons, underscoring the company’s robust financial health. Furthermore, Amazon’s substantial backlog for AWS, standing at $156 billion as of the close of 2023 and marking a $45 billion upswing from 2022, paints a rosy picture for the cloud computing behemoth’s future earnings.

With a burgeoning pipeline of contracted performance obligations signaling a buoyant year ahead for AWS, the trajectory of Amazon’s overall operating income appears primed for a stratospheric ascent. History attests that such a surge invariably translates into a boon for the company’s stockholders, entrusting them with a promising vista.

As is the nature of investing, certainties are rare, and the future remains an enigmatic realm. However, signs point steadfastly towards a northward trajectory for Amazon’s primary profit driver. And in that lies the heartening promise for Amazon’s shareholders as they stand on the cusp of a possibly lucrative juncture.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The thoughts and opinions expressed herein belong to the author and do not represent those of Nasdaq, Inc.