Amazon(AMZN) The Motley Fool·2025-01-23 11:45Amazon's Growth Potential - Amazon's stock has risen approximately 180% since the start of 2023, indicating strong performance [1] - The company has significant growth potential driven by three key factors: advertising, Amazon Web Services (AWS), and improving profit margins [1] Advertising as a Growth Segment - Amazon's advertising division has become a major revenue driver, generating $14.3 billion in Q3, up 19% year-over-year [3] - Advertising revenue now surpasses subscription services, highlighting its importance to the company [3] - Amazon is expanding its ad services by allowing other retailers to advertise on its platform, creating a new growth lever [4] Amazon Web Services (AWS) Dominance - AWS is the largest cloud computing provider, benefiting from the shift from on-premises to cloud computing [5][6] - AWS contributes 60% of Amazon's total operating income, making it a critical profit driver [8] - Despite some challenges in 2023, AWS saw a resurgence in growth in 2024, with Q3 growth matching the best quarter in two years [7] Improving Profit Margins - Amazon's profit margins are rapidly increasing due to CEO Andy Jassy's focus on efficiency and the growth of high-margin businesses like advertising, AWS, and subscription services [9][10] - Earnings growth is outpacing revenue growth, leading to impressive stock returns since 2023 [11] - Wall Street analysts expect 11% revenue growth and 20% EPS growth in 2025, indicating continued strong performance [12] Conclusion - Amazon's strong performance in advertising, AWS, and profit margins positions it as a compelling investment opportunity [13]