Understanding This Quiet Yet Powerful Catalyst for Amazon Stock Is Key to the Bull Thesis (Hint: It's Not AWS)

Core Insights - Amazon's market capitalization has exceeded $2.3 trillion, driven by strong performance in e-commerce and Amazon Web Services (AWS), alongside growing optimism in artificial intelligence (AI) [1] - Advertising has emerged as a significant and rapidly growing revenue stream for Amazon, benefiting from its extensive data and the shopping intent of its visitors [2] Advertising Growth - Amazon's advertising services revenue increased by 23% year-over-year to approximately $15.7 billion in Q2 2025, with 22% growth when excluding currency impacts, following an 18% growth in Q1 [4] - Key drivers of this growth include increased shopping activity, enhanced ad tools, the rollout of Prime Video ads, and partnerships in connected-TV (CTV) that expand ad serving capabilities [4] - A notable partnership with Roku has allowed Amazon to reach an estimated 80 million U.S. households, enhancing advertiser reach into high-engagement streaming [4] Strategic Importance of Advertising - Advertising represents high-margin revenue that complements Amazon's extensive retail and media ecosystem, contributing to the company's profit growth [6][8] - The integration of various advertising formats, including retail search, brand placements, and a demand-side platform (DSP), allows Amazon to align advertiser goals with shopper intent effectively [5] - The advertising business is reshaping Amazon's profit engine, providing a long runway for growth alongside AWS [7]