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Understanding This Quiet Yet Powerful Catalyst for Amazon Stock Is Key to the Bull Thesis (Hint: It's Not AWS)
Yahoo Finance· 2025-10-02 10:51
Key Points Amazon's ad business is growing fast and quietly reshaping the company's profit engine. Prime Video ads, retail search, and Amazon's demand-side ad-buying platform give the company a unique flywheel. Advertising adds another long runway alongside Amazon Web Services. These 10 stocks could mint the next wave of millionaires › Amazon (NASDAQ: AMZN) is best known for its e-commerce empire and its highly profitable cloud arm, Amazon Web Services (AWS). The tech giant's shares have rallied ...
Prediction: This Is What Amazon's Stock Will Be Worth by 2030
The Motley Fool· 2025-09-18 09:30
Core Viewpoint - Amazon has the potential to be a top growth stock due to its strong base business and rapidly growing divisions, particularly in advertising and cloud computing [1][2]. Group 1: Business Segments and Growth Drivers - Amazon's North American commerce divisions generated $7.5 billion in operating profit on $100 billion in sales in Q2, indicating that the e-commerce segment is not as profitable as perceived [4]. - The advertising services division is the fastest-growing segment, with a 23% year-over-year revenue increase in Q2, contributing significantly to Amazon's overall operating profits [5]. - Amazon Web Services (AWS) reported a 33% operating margin, benefiting from the AI arms race as clients rent computing resources for AI model training, despite a decrease from Q1's 39% margin due to increased spending on capacity [7]. Group 2: Market Trends and Projections - The global cloud computing market is projected to grow from $752 billion in 2024 to $2.39 trillion by 2030, indicating strong future demand for AWS [8]. - Amazon's operating profits increased by 31% in Q2, and a conservative growth rate of 20% is projected through 2030, leading to an estimated $210 billion in operating profits by the end of that year, a 172% increase from current levels [9][11]. - If Amazon maintains a valuation of 25 times operating profits, the company could reach a market cap of $5.3 trillion, translating to a stock price of approximately $492 by 2030 [11][12].
Amazon Stock: Headed to $300?
Yahoo Finance· 2025-09-14 17:45
Core Insights - Amazon has shown consistent performance in 2025, with ongoing discussions about the impact of artificial intelligence on its financials [1] - The company is focusing on its most profitable segments, which, along with effective cost management, positions it for healthy earnings growth [2] Financial Performance - In Q2, Amazon's net sales increased by 13% year-over-year to $167.7 billion, while operating income rose by 31% to $19.2 billion [4] - AWS revenue grew by 17.5% to $30.9 billion, and advertising services increased by 23% to $15.7 billion, both exceeding overall growth and contributing higher margins [4][5] - The earnings per share improved to $6.55 from $4.18 year-over-year, reflecting enhanced earnings power [5] Business Segments - AWS accounted for approximately 18% of total revenue, while advertising services made up over 9%, indicating a shift towards higher-margin business areas [5] - AWS has an operating margin of about 37%, significantly higher than the overall company's margin of around 11% [6] Future Guidance - For Q3, Amazon anticipates revenue between $174 billion and $179.5 billion, representing a year-over-year increase of 10% to 13%, with operating income projected between $15.5 billion and $20.5 billion [7] - The guidance suggests improved operational efficiency compared to two years ago, supporting steady revenue and earnings growth [7][8]
1 Brilliant Artificial Intelligence (AI) Stock That Will Be Worth More Than Apple by 2030
The Motley Fool· 2025-08-18 01:30
Core Viewpoint - Amazon is positioned to surpass Apple in market capitalization over the next five years due to superior growth rates and profit margins driven by its business segments [1][2]. Business Units and Growth Drivers - Amazon's growth is primarily driven by two business units: Amazon Web Services (AWS) and advertising services, rather than its online store [4]. - AWS generated nearly $31 billion in revenue in Q2, growing 17% year over year, despite facing strong competition from Microsoft Azure and Google Cloud [6][7]. - The advertising services segment is Amazon's fastest-growing area, with revenue increasing by 23% year over year, indicating a strong demand for advertising on its platform [8][9]. Profit Growth and Margins - Amazon's operating income rose 31% year over year in Q2, significantly outpacing Apple's 11% increase in operating income for Q3 FY 2025 [11]. - The growth of high-margin businesses like AWS and advertising services has contributed to rising profit margins for Amazon, positioning it for substantial profit growth over the next five years [10][11]. Market Position and Future Outlook - Analysts expect Amazon's profit growth rate to be much faster than Apple's, with projections indicating a 271% increase in operating income over five years for Amazon compared to a 69% increase for Apple [11]. - This trajectory suggests that Amazon could surpass Apple in size, making it an attractive stock pick for investors [12].
Better "Magnificent Seven" Stock: Apple or Amazon?
The Motley Fool· 2025-07-08 17:15
Core Viewpoint - Apple and Amazon, both part of the "Magnificent Seven," have shown strong long-term returns, but current growth rates raise questions about their investment appeal [1] Group 1: Revenue Growth - Both Apple and Amazon have experienced relatively slow revenue growth, with each company growing less than 10% in their most recent quarter [3][5] - Apple's growth issues stem from a lack of innovative products and a lengthening smartphone turnover cycle, leading to less frequent consumer upgrades [6][7] - Amazon's e-commerce segments, while significant, are the slowest-growing parts of its business, impacting overall growth rates [8] Group 2: Profitability - Amazon's high-margin segments, such as AWS and advertising, are growing rapidly, with AWS generating 63% of operating profits despite only accounting for 19% of total sales [10] - In Q1, Amazon's operating profits increased by 20% year over year, significantly outperforming Apple's 6% growth in operating profits [11] - Amazon's profit growth is driven by its strong-performing segments, providing a catalyst for earnings growth that Apple currently lacks [12]
2 No-Brainer Reasons Why Amazon Is a Must-Own Stock
The Motley Fool· 2025-05-10 09:35
Core Insights - Amazon's e-commerce business is not the primary profit driver, with other segments contributing more significantly to profits [1] - AWS generates the majority of Amazon's operating profits, accounting for 63% of operating profits in Q1 with a 40% operating margin [3][10] - The advertising segment is the fastest-growing part of Amazon's business, with an 18% year-over-year revenue growth in Q1 [6][10] Revenue Breakdown - Online stores generated $57.4 billion in Q1, growing 5% year-over-year, making up 37% of total revenue [2] - Third-party seller services brought in $36.5 billion, with a 6% growth, accounting for 23% of total revenue [2] - AWS revenue was $29.3 billion, growing 17% year-over-year, representing 19% of total revenue [2] - Advertising services generated $13.9 billion, with an 18% growth, making up 9% of total revenue [2] Profit Contribution - AWS and advertising services combined accounted for an estimated 86% of Amazon's operating profits in Q1 [10] - If advertising services are assumed to have a 30% operating margin, they would have generated approximately $4.2 billion in operating profits, contributing about 23% to total operating profits [9][10] Future Outlook - AWS is expected to continue strong growth due to the increasing demand for cloud computing, particularly in AI infrastructure [4][5] - Advertising growth may face challenges during economic downturns, but Q1 figures suggest resilience, and potential shifts in product pricing could lead to increased advertising needs [11][12]
Nasdaq Bear Market: 2 No-Brainer Stocks to Buy Right Now
The Motley Fool· 2025-04-13 12:15
Group 1: Market Overview - The market experienced a sharp rebound due to President Trump's announcement of pausing tariffs and implementing a flat 10% rate, except for China, but the Nasdaq remains in a bear market, defined as a 20% drop from its all-time high [1] - Despite the bear market, there are still investment opportunities available, with Amazon and The Trade Desk highlighted as top buys for the next three to five years [2] Group 2: Amazon - Amazon is often viewed as vulnerable due to its reliance on Chinese goods, but this perspective overlooks its diverse revenue streams [3] - The company has multiple segments, including e-commerce, advertising services, and Amazon Web Services (AWS), with the latter two being less affected by potential tariff increases [4] - In 2024, AWS accounted for 58% of Amazon's operating profit while only representing 17% of sales, indicating the strength of its ancillary segments [6] - The advertising segment is estimated to have generated $11.2 billion, contributing significantly to Amazon's overall profitability [6][7] - The current market conditions present a favorable opportunity to invest in Amazon, as its core profit-generating segments remain robust [7] Group 3: The Trade Desk - The Trade Desk's stock has declined over 50% in 2025 due to both internal challenges and broader market sell-offs, leading to a significant drop in stock price [8][9] - Despite missing revenue guidance for the first time and providing a weak outlook, The Trade Desk is expected to grow revenue at an 18% pace in 2025 and 20% in 2026, making it an attractive investment opportunity [9][11]