Amazon: The Overlooked AI Giant With a Valuable Business Segment

Amazon is an overlooked AI giant with a valuable business segment called Amazon Web Services (AWS) generating 39.5% operating margins and $11.5 billion in profits last quarter. AWS is growing due to the rise of artificial intelligence, and its market share of around 30% makes it the largest cloud infrastructure provider. Amazon's existing scale and investment power make it a promising long-term bet for AI-related returns.

Amazon's Amazon Web Services (AWS) division has emerged as a standout performer in the cloud computing sector, driven by the exponential growth of artificial intelligence (AI). With a market value of $2.4 trillion, Amazon has seen its stock return 745% over the last decade, fueled by robust financials and strategic investments in AI and cloud infrastructure [1].

AWS, a key segment of Amazon's business, generated $11.5 billion in profits last quarter, achieving an operating margin of 39.5% [1]. The division's growth is attributed to the increasing adoption of AI technologies, which has led to a surge in demand for cloud services. AWS's market share of around 30% makes it the largest cloud infrastructure provider, underscoring its dominant position in the industry [1].

Despite the strong performance, Amazon has recently announced job cuts in its AWS division, with hundreds of employees let go as part of a broader shift towards AI-driven automation [2]. These layoffs are part of a strategic effort to optimize resources and deliver innovation for customers, as the company continues to invest in and expand its AI capabilities.

Looking ahead, analysts predict that Amazon's AWS division will continue to grow significantly. Morgan Stanley analysts anticipate that Amazon will achieve a market value of $3 trillion within 12 months, driven by its AI-driven revenue growth and profitability across its e-commerce, digital advertising, and cloud computing businesses [3].

While the job cuts may raise concerns, they are part of a broader trend in the tech industry, as companies like Microsoft and Meta also announce layoffs in response to the growing use of AI tools. The long-term potential of AWS and Amazon's AI investments makes it a promising long-term bet for investors seeking exposure to AI-related returns.

References:
[1] https://cainagra.net/news/story/33460918/is-this-the-only-tech-stock-you-need-to-own-for-the-next-decade
[2] https://www.business-standard.com/technology/tech-news/amazon-aws-job-cuts-cloud-layoffs-ai-automation-tech-microsoft-news-125071701537_1.html
[3] https://finance.yahoo.com/news/2-artificial-intelligence-ai-stocks-073000941.html