AWS Fuels Amazon's Earnings Growth Amid Hefty Investment Costs

Amazon's (AMZN) strong earnings growth is being driven by its cloud computing division AWS, which saw revenue rise to 37% and margins hit 39.4%. This growth is a significant contributor to Amazon's operating income, accounting for 61% of it despite only making up 21% of the company's revenue. In addition to this, Amazon's retail business is also showing signs of improvement, with profitability rising in its North America segment.

The article suggests that Amazon's $220 billion infrastructure investment will need to pay off by 2027 if the current valuation multiple is to be justified. This implies that the company has a significant amount of work to do to translate its spending into revenue and cash flow.