Amazon.com, Inc.
Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, fire tablets, fire TVs, echo, ring, blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, Artificial intelligence, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. The company was incorporated in 1994 and is headquartered in Seattle, Washington.
What does it do?
Amazon started as an online bookstore in 1994 and has since grown into one of the largest companies on Earth. Today it runs the world's biggest online shopping marketplace, where you can order almost anything and have it at your door in a day or two. It also rents computing power to other businesses through its cloud division, Amazon Web Services — think of it like renting space on Amazon's massive computers instead of buying your own. On top of that, it sells ads, runs a subscription service called Prime, and even owns physical stores like Whole Foods.
Amazon is one of only a handful of companies worth over $2.5 trillion, which means its ups and downs move the entire stock market. Right now, investors care deeply about Amazon because its cloud business, AWS, sits right at the heart of the AI boom — every company building AI tools needs cloud computing, and Amazon is one of the top two providers in the world. That makes Amazon a backdoor bet on artificial intelligence without the all-or-nothing risk of a pure AI startup.
How does it make money?
Amazon made $716.9 billion in revenue last year, up from $638 billion the year before — that is roughly 12% growth for a company already this size, which is remarkable. The online retail and physical stores business brings in the bulk of that revenue, but retail margins are thin, meaning Amazon does not make much profit on each sale. The real money machine is AWS, which generates a much smaller slice of revenue but contributes a disproportionately large share of operating profit — industry estimates put AWS profit margins around 30-35%. Advertising is the fast-growing third pillar, now a multi-billion dollar business built on Amazon's ability to show you ads exactly when you are ready to buy something.
Why do investors care?
The growth story is really about AWS and advertising becoming bigger and bigger parts of the business, replacing low-margin retail as the main profit driver. Amazon has also been aggressively cutting costs over the past two years — laying off workers and restructuring its delivery network — so profits have jumped sharply even as revenue grew steadily. Net income hit $77.7 billion last year, a massive leap that showed the business can be extremely profitable when managed tightly. For the thesis to work, AWS needs to keep winning cloud contracts, advertising revenue needs to keep growing, and Amazon needs to avoid slipping back into its old habit of spending every dollar it earns on expansion.
Deep Dive
MemberA full investor briefing on Amazon.com, Inc. — history, leadership, risks, and outlook.