AWS Drives Amazon's Growth as Stock Looks Poised for Future Success
Amazon's (NASDAQ: AMZN) AWS segment is often overlooked by investors, but it's one of the company's biggest profit drivers. In the second quarter, AWS accounted for about 21% of Amazon's revenue, but its operating income was a significant 60% of Amazon's total.
AWS is also growing faster than Amazon's other segments, with a 37% increase in revenue during Q2 compared to 16% and 15% growth in North American commerce sales and international sales respectively. This is a key reason why Amazon looks like a good stock to buy now, as the pattern of AWS outperforming the company's other divisions is likely to continue.
Amazon is investing heavily in data centers to increase computing capacity for AWS, which is essential for AI hyperscalers that require significant amounts of power. CEO Andy Jassy noted that Amazon will not have enough computing power available to meet demand by 2026 and 2027. With a backlog of $496 billion, there's already a massive amount of business lined up for AWS.
While The Motley Fool Stock Advisor analyst team has identified other stocks as top picks, including Netflix and Nvidia in the past, Amazon remains a solid choice for investors looking to capitalize on AWS' growth potential.