Amazon.com (NASDAQ:AMZN) continued to experience tremendous growth across retail, cloud services, and its burgeoning advertising business in the first quarter. Moreover, strong demand boosted the company's profits, which I believe investors continue to undervalue.

Here are five highlights from the latest earnings report that point to further gains for Amazon investors and reasons for new investors to consider the stock.

1. Amazon is gaining market share in groceries

For the first quarter, net sales increased by 44% year over year, or 41% excluding currency changes, as customers kept shopping online even as the economy began to reopen and COVID-19 began to be brought under control. 

Prime members "continue to shop with greater frequency and across more categories than before the pandemic," as CFO Brian Olsavsky explained during the earnings call. 

Amazon Prime delivery vans parked outside a large warehouse facility.

Image source: Amazon.

Groceries have also been a boon for Amazon. Delivery from Whole Foods stores and growth at Amazon Fresh helped Amazon gain market share in the grocery sector over the last year. 

The combination of free grocery delivery, Prime Video, and other free digital services is a winning formula and should lead to lasting engagement in Amazon's retail business over the long term.

A bar chart showing Amazon's recent growth in net sales.

Image source: Amazon earnings presentation. TTM = trailing 12 months.

2. Amazon's global expansion is gaining momentum

Management admitted surprise at the level of international growth in the quarter. The international segment grew 50% year over year excluding currency changes. 

Just a few short years ago, the international business reported sales growth of just 15% in Q4 2018. But once again, engagement with Prime benefits has been Amazon's winning card as it seeks to expand worldwide. 

Specifically, Amazon said Prime Video is a significant acquisition channel in countries where it has introduced Prime. Over the last year, Prime Video streaming hours increased more than 70% worldwide. 

The international segment is turning more profitable as sales volume climbs. Segment operating income surged to $1.2 billion in the quarter. The international business used to be a consistent money loser but has now posted four consecutive quarters of profitable growth. 

A bar chart showing Amazon's growth in international sales and segment operating income.

Image source: Amazon earnings presentation.

3. Amazon Web Services' growth accelerated

Amazon's cloud services business posted a sales increase of 32% year over year, an acceleration over the 28% growth rate in the fourth quarter. Oslavsky's comments suggest that high demand for cloud services may continue in the near term.

"During COVID, we've seen many enterprises decide that they no longer want to manage their own technology infrastructure," Olsavsky said. "We expect this trend to continue as we move into the post-pandemic recovery."

Growth in cloud services continues to pad Amazon's bottom line. Amazon Web Services (AWS) reported a 41% year-over-year increase in operating profit, bringing its trailing-12-month operating income to $14.6 billion, or more than half of Amazon's total operating profit companywide. 

A bar chart showing AWS sales and operating income growth.

Image source: Amazon earnings presentation.

4. Advertising is driving engagement for Amazon

Amazon reports advertising revenue in the "other" sales category. This line item increased by 73% year over year excluding currency changes. At $24.5 billion in trailing-12-month sales, this is becoming a sizable business.

Most importantly, advertising is emerging as another engagement driver, since it helps customers discover items they wouldn't know about otherwise. 

Amazon doesn't break out specific figures for the advertising business, but it's a lucrative stream of revenue, since selling ad placements doesn't require the capital investment of building warehouses and acquiring inventory like the retail side. 

5. Amazon's profits are soaring

Strong sales volumes in retail, cloud services, and advertising are pushing Amazon's profits to record levels. Net income jumped 220% year over year to reach $8.1 billion. 

A bar chart showing Amazon's recent growth in net income.

Image source: Amazon earnings presentation.

Higher profits are also driving record levels of cash that Amazon can reinvest in the business to produce even more growth. Over the last four quarters, cash from operations surged 69% to reach $67 billion. 

While Amazon may experience a lower rate of revenue growth in the near term as it laps the stellar performance it posted during 2020, investors are still undervaluing the company's future profit stream. For example, the shares currently trade for 26 times Amazon's trailing cash from operations -- the same level they have traded for the last 15 years.

With so much momentum and opportunity on Amazon's side, the stock remains a top growth stock to buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.