Please ensure Javascript is enabled for purposes of website accessibility's Biggest Profits Don't Come From E-commerce

By Motley Fool Staff – Nov 14, 2016 at 2:16PM

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The business unit that's doing the best job of raking in operating cash flow for the online retail giant is not the one you might expect.

Amazon Web Services isn't one of the company's most popular segments, but it provides a massive chunk of Amazon's (AMZN -0.82%) operating profits.

In this segment from Industry Focus: Tech, Motley Fool analyst Dylan Lewis and Fool contributor Daniel Sparks go over the numbers, and why investors should start keeping an eye on this segment if they aren't already.

A full transcript follows the video.

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Daniel Sparks: As far as Amazon Web Services, that was another interesting area during the call. Of course, it always is. I think investors think of Amazon as this e-commerce company. At the end of the day, a huge chunk of their operating profits comes from Amazon Web Services, even though it's only about 10% of revenue. This was an area that investors should always make sure and turn to, even though they might not have experience with Amazon Web Services. The fact is, Amazon Web Services is a big deal. We can call it AWS for short.

Dylan Lewis: Yeah. That is really a cash cow for the business. I love the statistic. The division's $861 million operating profit was more than 3 times larger than the North America retailing profits, which is bananas, and gives you an idea of how crucial it is to the business, despite only being 10% of the top line. Certainly something to be mindful of. That segment in particular had 55% year-over-year sales growth, and 101% higher operating profits. Those are two things that are trending very nicely for them.

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