AWS Growth Drives Amazon Stock Buy

The Amazon stock price has jumped 10.47% this year to reach $254.98, but one writer is still buying shares. The reason for their optimism lies in the company's cloud business, AWS, which posted its fastest growth in 18 quarters with a 37% year-over-year increase to $42.232 billion in Q2.

AWS now runs at a $169 billion annualized revenue run rate and has a backlog of $496 billion growing triple digits year over year. This means that Amazon is already contracted for significant amounts of future revenue, which gives the company pricing power and stability.

The writer also highlights the growth of Amazon's AI and chips businesses, each exceeding $25 billion in annualized run rates with triple-digit growth. Additionally, the rest of the company is compounding too, with advertising delivering $19.809 billion, up 26%, and consolidated revenue reaching $200.606 billion.

While some may question Amazon's high capital expenditures, which turned negative at -$7.6 billion TTM in Q2, the writer believes that the spending on data-center capital is a long-term investment with servers breaking even in less than three years and useful lives stretching at least five to six years.