Amazon’s AWS drives more than half of operating income, enhancing its appeal as a growth stock
Amazon’s net sales in the latest quarter rose 17%, while AWS revenue grew 28%. AWS accounted for 20% of revenue, posted an operating margin of more than 35%, and contributed more than half of the company’s operating income.
Amazon announced that net sales in its latest quarter increased by 17%. During the same period, revenue from AWS, its cloud business, grew by 28%. The company said revenue growth and cloud growth were occurring simultaneously.
AWS accounts for 20% of Amazon’s total revenue. AWS’s operating margin is said to be above 35%. Amazon said AWS makes a significant contribution to the company’s performance in terms of profitability.
Amazon disclosed that AWS accounts for more than half of the company’s operating income. The company said it is expanding its AI capabilities, including custom AI chips. As an example of securing a major customer, Amazon cited Meta’s adoption of Graviton chips.
The market sees Amazon’s share price currently trading at 31 times current earnings and 27 times forward earnings. These figures compare the share price with earnings metrics. The company announced earnings growth and an expansion of AI-related products at the same time.
Amazon said it is strengthening its cloud competitiveness through AI chip development and customer contracts. The company’s announcements have focused mainly on AWS growth and changes in profitability. Further earnings and contract announcements will be key going forward.
Sources: The Motley Fool
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