AWS on Track for $1 Trillion Revenue, Analysts Say
Amazon and Visa are two high-quality stocks that can deliver superior results for patient investors over the long term. Analysts expect Amazon's earnings to grow at a rate of around 20% annually in the years ahead, which can still support market-beating returns.
The stock has been roughly in line with the S&P 500 so far this year, but its sales growth last quarter was impressive, with two of its largest segments showing accelerating revenue growth. Amazon's cloud business, Amazon Web Services (AWS), reported 37% year-over-year sales growth to $42 billion in the second quarter, with a 39% operating margin.
AWS has a contracted backlog of $496 billion and is expected to grow at a triple-digit rate. If it reaches $1 trillion in annual revenue within a decade or so, Amazon's market cap leaves plenty of room for upside.
Visa operates one of the dominant payment networks with a long runway for growth. Its payment volume rose 10% year-over-year in the second quarter, while revenue climbed 14% to $11.6 billion. The company has a high profit margin of 50% and is expected to continue growing at double-digit rates over the long term.