Amazon Cloud Business Drives Stock to Potential Double by 2028

Amazon's cloud business is booming, driven by artificial intelligence and massive economies of scale in its e-commerce delivery business. The company's cloud computing division, Amazon Web Services (AWS), saw revenue grow 37% year over year last quarter to $148.4 billion over the last 12 months.

AWS' backlog growth and capital spending plans indicate that this revenue growth should accelerate in the quarters ahead. With profit margins at 37% over the last 12 months, AWS has a path to doubling by 2028 driven by massive spending plans from AI start-ups.

Amazon's other division, which houses its e-commerce platform, consumer electronics, and services like Amazon Prime subscriptions and advertising, also saw strong growth. The North America and International segments combined for $627 billion in retail revenue last quarter, with both segments growing 15% or more.

The company's high-margin advertising division was up 26% last quarter, while it has invested heavily in areas such as faster delivery times, warehouse robotics, and self-driving vehicles. These technologies should lead to greater operating leverage and higher margins once implemented across its e-commerce supply chain.