Thinking of Buying Amazon Stock? The Company's Biggest Moneymaker Might Surprise You.

Core Insights - Amazon's retail business is significant but serves as a facade for its more profitable services segment [1][12] - The company's product sales in Q1 2025 reached nearly $64 billion, but its cost of sales was approximately $77 billion, indicating a challenging retail operation [3][6] - Amazon generated a total revenue of roughly $156 billion in Q1 2025, with services accounting for nearly 60% of this total [13] Revenue Breakdown - In Q1 2025, Amazon's services segment generated $92 billion, which includes third-party seller fees, AWS sales, advertising services, and Amazon Prime membership fees [9] - The services segment is crucial as it allows Amazon to leverage its infrastructure to generate additional income from multiple customers [10][11] - The operating income for Amazon in Q1 2025 was $18 billion, highlighting the profitability of its services compared to its retail operations [13][14] Cost Structure - The cost of sales includes product costs, shipping, and digital media content costs, which complicates the understanding of the retail segment's profitability [4][5] - The inclusion of digital media costs in the cost of sales may obscure the true performance of the retail business [6][10] - Operating costs totaled $137 billion, with over 55% attributed to product costs, indicating the high expenses associated with retail operations [13]