How Amazon actually makes money and is it a good investment?
Amazon is a very big company. It is the biggest online retail store. Millions of people shop online from Amazon, especially now during the pandemic. People think Amazon’s main source of income is in online retail, but that is actually where people are wrong.
Amazon’s main source of income is actually from AWS (Amazon Web Services). This is their cloud platform.
If we take a look at their recent Quaterly results we can see that their North America Segment shows their Operating income — TTM is not increasing and is hovering between 6 billion and 8 billion.
Next if we look at their International Segment they actually have negative operating income.
For AWS their Operating income — TTM starting Q2 2019 was at 8.5 billion and at Q3 2020 is at 12.5 billion. Their AWS is growing more than their other segments and is the biggest source of income.
AMZN-Q3–2020-Earnings-Release.pdf A link to their quarterly earnings report.
Now that we have seen what Amazon’s main source of income is, we have to determine is their stock (AMZN) a good investment. Well even though AWS is growing fast, it is growing less and less each quarter. Their growth from Q2 of 2019 to Q3 of 2019 was 37%. Then for Q3 to Q4 it was 35%. On their 2020…
