Amazon (AMZN) Stock: The Silent Profit Juggernaut Wall Street Isn’t Talking About

Amazon’s profit engine keeps humming—while analysts obsess over flashier plays.

The stealth dominance of AMZN

While crypto bros chase memecoins and Tesla stans argue over Cybertruck specs, Amazon’s stock keeps printing money like a Fed-backed stablecoin. No hype, just relentless execution.

Retail’s quiet conqueror

Prime subscriptions now outnumber the populations of most G7 nations. AWS revenue could singlehandedly fund a small country’s space program. But sure, let’s keep debating whether ‘Web3’ is a real thing.

The closer

In a market obsessed with shiny objects, AMZN remains the boring billionaire at the party—sipping vintage profit margins while everyone else does keg stands with speculative assets. Sometimes the smartest trade is owning the casino.

TLDR

• Amazon has a $2.4T market cap and is seen as a dark horse to become the world’s largest company by 2030
• Advertising segment grew 18% in Q1 and is now Amazon’s fourth-largest business unit
• AWS cloud computing delivered 17% growth and contributed 63% of total operating profits despite being 19% of revenue
• Redburn analysts set a $245 price target and expect AWS to have an “Azure moment” rebound
• Amazon’s high-margin segments are driving faster profit growth than overall revenue growth

Amazon trades at $222.90 with a $2.4 trillion market cap, positioning itself as an unexpected challenger to Microsoft and Nvidia for the world’s largest company title. The e-commerce giant’s growth story has evolved beyond online retail into high-margin segments that could fuel its ascent.

The company’s advertising business has emerged as a key growth driver. Five years ago, this segment barely existed. Today it ranks as Amazon’s fourth-largest division, trailing only online stores, third-party seller services, and Amazon Web Services.

Advertising revenue jumped 18% in the first quarter, making it the fastest-growing segment. This growth stems from Amazon’s treasure trove of consumer data, particularly direct shopping behavior information. Such data proves incredibly valuable to advertisers seeking targeted audiences.

The advertising push matters because of margin expansion. While Amazon doesn’t break out individual segment margins, advertising typically delivers much higher operating margins than traditional retail. Companies like Meta Platforms demonstrate how profitable advertising-focused businesses can be.

Higher-margin segment growth allows Amazon’s profits to increase faster than overall revenue. This dynamic has played out over recent years, though the trend is moderating somewhat. Still, operating profit growth remains healthy at around 20%.

AWS Drives Profit Machine

Amazon Web Services continues powering the company’s profit engine. The cloud computing division generated 17% growth in the first quarter, benefiting from two major trends. Companies continue migrating from on-premises systems to cloud-based solutions while AI workloads drive additional demand.

AWS contributed 63% of Amazon’s total operating profits in Q1 despite representing just 19% of overall revenue. The segment’s operating margin hit an impressive 39%, showcasing the division’s profitability. This profit concentration means AWS performance directly impacts Amazon’s bottom line.

The cloud business faces some headwinds but analysts remain optimistic. Redburn reiterated a “Buy” rating with a $245 price target on June 26. The firm describes Amazon as “resilient” and expects AWS growth to rebound.

Amazon shares have underperformed year-to-date due to weak AWS performance and tariff-related e-commerce concerns. However, Redburn analysts believe AWS growth will exceed lowered expectations. They predict AWS will deliver its own “Azure moment” – a surprise reacceleration that resets expectations higher.

Competition for Top Spot

Amazon faces stiff competition in its quest to become the world’s largest company. Nvidia and Microsoft currently battle for the top position by market cap. Amazon’s path to the summit depends on sustaining high-single-digit revenue growth and 20% operating profit increases.

The stock trades at similar valuation levels to Microsoft and Nvidia. This means Amazon can’t rely on multiple expansion to drive outperformance. Growth must come from fundamental business improvements rather than investor sentiment shifts.

Amazon will likely struggle to catch Nvidia, which grows at a faster rate. However, the company could potentially surpass Microsoft, which delivers low double-digit growth. Amazon’s profit growth engine gives it an edge in this matchup.

The company’s two-pronged growth strategy focuses on advertising and cloud computing rather than traditional e-commerce. Both segments offer higher margins and faster growth than Amazon’s legacy retail business. This strategic shift positions Amazon for sustained profit expansion.

Revenue growth expectations remain reasonable given current trends. The advertising business should continue benefiting from Amazon’s data advantages. Meanwhile, AWS stands to gain from ongoing cloud migration and AI adoption.

Analysts view Amazon as an excellent long-term investment despite near-term challenges. The company’s profit growth trajectory should deliver market-beating returns over the next five years. Recent underperformance may create buying opportunities for patient investors.

Redburn analysts expect AWS to deliver a surprise reacceleration similar to Microsoft’s Azure cloud service breakthrough.