AWS Fuels Amazon's Growth as Revenue Jumps 37%

Amazon's (NASDAQ: AMZN) success in recent years has been largely attributed to its cloud computing division, Amazon Web Services (AWS). While many investors focus on the company's e-commerce business, AWS' operating margin is a significant contributor to Amazon's overall profit. In fact, during the second quarter of 2023, 60% of Amazon's operating income came from AWS.

AWS' revenue growth has been impressive, increasing by 37% year over year in Q2. This growth can be attributed to Amazon's massive investment in building out new data centers for increased computing capacity. As these new data centers come online, it is likely that AWS' revenue will continue to rise, bringing Amazon's operating profits along with it.

One of the key reasons why Amazon is a good stock to buy now is its ability to grow its operating profits at a faster pace than revenue due to the smaller size of AWS compared to the rest of the company. This means that as more computing capacity comes online and AWS usage increases, Amazon's operating profits will likely outperform the market.