AI Cloud Concerns Hover Over Amazon Stock. But Analyst Says Don't Forget This 'Crown Jewel.'

Group 1: Amazon's Advertising Business - Amazon has built the third-largest advertising business globally, trailing only Meta and Google, with ad revenues growing more than 20% annually since 2019, which is double the pace of Amazon's overall sales growth [2][3] - The advertising business is crucial for Amazon's story, as it targets high-intent shoppers at the moment of purchase, despite accounting for less than 10% of total sales [2][3] Group 2: Amazon Web Services (AWS) and Competition - AWS is the primary profit driver for Amazon and is expected to be a key growth driver over the next three to five years, but the advertising business is more critical for return on invested capital in the one to three-year timeframe [3] - AWS is responsible for over 80% of Amazon's estimated $100 billion capital expenditures in 2025, but it has 50% lower margins than advertising revenues and faces strong competition from Microsoft, Google, and Oracle [3] Group 3: Stock Performance and Analyst Ratings - Amazon stock is currently rated a buy with a price target of $265, trading around $220.62 [4] - The stock has seen a decline of 2% in August and 4% in September, with concerns over tariff impacts and disappointing Q2 results compared to competitors [5][6]