AWS Explosive Growth: The Core Engine of Amazon's Profits
☁️ Why is AWS So Important?
If you had to pick just one reason for Amazon's 13% stock surge? It's AWS (Amazon Web Services). AWS isn't just a business unit—it's the core engine of Amazon's entire profit.
📊 AWS Revenue: 20%+ Growth Reacceleration
Quarterly Growth Rate Trend
- Q1: 16.9%
- Q2: 17.5%
- Q3: 20%+ breakthrough!
AWS revenue growth is reaccelerating. This is a crucial signal.
Why is Reacceleration Important?
- Evidence of surging AI infrastructure demand
- Confirmation of cloud market dominance
- Suggests advantage over competitors (Azure, GCP)
💰 AWS Margins: Highest Profitability Business
Comparing margins across Amazon's three major business segments:
| Segment | Operating Margin |
|---|---|
| North America E-commerce | ~5% |
| International E-commerce | ~2% |
| AWS | ~30% |
AWS records margins 6x higher than other segments. This is why AWS is called the "profit engine."
📈 Backlog: Remarkable Growth
$200 Billion+ Backlog
AWS backlog has grown to over $200 billion. Backlog refers to amounts customers have contracted to use AWS but haven't actually consumed yet.
Even More Remarkable
What management revealed in the earnings call:
"New deals signed in October alone exceeded our total deal volume for all of Q3"
This shows AWS momentum is accelerating.
Backlog Growth Rate
- Same period last year: $164 billion
- This year: $200 billion+
- Growth rate: 23%+
🔌 AI Infrastructure Investment
2x Data Center Capacity
Management stated they've doubled power capacity compared to 2022. Since AI workloads require enormous power, this means they're prepared for AI demand.
CapEx Strategy
- Current: Investing nearly all operating cash flow into data centers
- Reason: Demand exceeds supply
- Result: Low free cash flow, but this is intentional growth investment
📊 Segment Revenue Analysis
Major Revenue Source Growth Rates
| Segment | Q3 Growth | Trend |
|---|---|---|
| AWS | 20%+ | 🚀 Accelerating |
| Advertising | 23.5% | 🚀 Accelerating |
| 3P Fulfillment | 12% | ↗️ Accelerating |
| Physical Stores | 10% | → Stable |
Not just AWS—advertising revenue also grew 23.5%, with high-margin businesses growing simultaneously.
🎯 Key Points for Investors
- AWS Growth Reacceleration: 20%+ growth is very impressive at this scale
- Backlog Momentum: New contracts exceeding entire quarter is a strong signal
- Margin Structure: AWS's 30% margin drives overall profits
- AI Investment: Aggressive CapEx lays foundation for future growth
In the next article, we'll analyze Amazon's valuation and investment outlook!
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