Producing over $500 billion in annual sales, Amazon (AMZN 1.30%) is among the biggest businesses on the planet. It is followed by dozens of Wall Street analysts who carefully track its operating metrics each quarter for signs of the tiniest shift in sales or profit momentum.

But smart investors know that long-term returns aren't driven by these quarter-to-quarter fluctuations. With that wider picture in mind, let's look at a few factors beyond the short-term sales and earnings headlines that make this business stand out as a potential investment.  

1. Tilting toward services

Amazon got its start selling books online, and today it maintains a massive presence in every niche across the e-commerce industry. The company delivers over $600 billion worth of merchandise to its customers annually, according to Statista.

But the fastest-growing part of its business right now is the services division, which includes things like cloud enterprise services, seller advertising fees, and subscription services. That part of the business expanded 17% year over year to $145.7 billion in the first half of 2023 and fueled nearly all of Amazon's growth in that period.

The e-commerce segment will likely contribute more toward growth once demand trends return to normal following the post-pandemic lull. Investors can expect to see more impressive gains from the services unit going forward.

2. It's all about the cash flow

Amazon is among the least profitable tech giants around. Microsoft enjoys an approximately 35% profit margin, for example. Even Meta Platforms' profitability sat near 20% following its spending surge in 2022. In contrast, Amazon's mid-single-digit net margin is closer to that of a traditional retailer like Walmart.

Yet executives manage the business around cash flow, and the picture is much brighter on this score. Trailing-12-month operating cash flow was up 74% to $61.8 billion as of second quarter. Free cash flow is back in solidly positive territory and is recovering nicely from the hit it took last year from heavy infrastructure spending.

AMZN Free Cash Flow Chart.

Data by YCharts.

Amazon still has many major growth initiatives that can pressure cash flow, including investments in the delivery network, digital content, and incorporating generative AI into its cloud services platform. But long-term improvements in this metric can be expected to make a big difference to investors' returns.

3. Priced for growth

Amazon's stock price has jumped over 60% year to date, but don't let that rally scare you away from a great investment. The tech giant is projecting higher profitability in the third quarter, for example, which might be the start of a positive trend that's driven by this past year's cost cuts. And sales gains could accelerate as the e-commerce industry returns to more normal growth patterns. The outlook is especially bright for services like the AWS platform.

The company will remain focused on growth for the foreseeable future, meaning it will be some time before management directs excess cash toward things like dividends and aggressive stock buybacks. But smart investors see that situation as a positive one that reflects the many avenues that Amazon can target as it seeks to add to its current $500 billion annual revenue haul.