Companies in the Pacific Northwest are just made different. There's a mix of tech ambition and frontier resilience that persists even when clouds and rain settle in for a long stretch. Amazon (AMZN -0.61%) oozes that Seattle mentality -- mixing grit, innovation, and persistence to transform itself from an online bookstore to one of the biggest companies in the world.
Today, Amazon operates a world-class e-commerce platform and is the biggest cloud computing provider in the world. With a market capitalization of $2.3 trillion, it's the fifth-biggest publicly traded company, and still has a fantastic growth story ahead of it.
For long-term investors, it's hard to dismiss Amazon as an investment. And the stock is currently on sale, down about 11% from all-time highs set earlier this year. Let's take a closer look at this Pacific Northwest legend.
Amazon's evolution
Amazon got its start in 1995 as an online bookstore, but it grew quickly. It went public just two years later and expanded its offerings to include music and DVD sales. By 2000, it was selling home improvement products, software and video games, and then opened its marketplace to third-party sellers. That was a game changer for Amazon, as it kick-started the e-commerce powerhouse that's become the world's most dominant.
But this Pacific Northwest kingpin wasn't even close to finished. It started its cloud computing segment, Amazon Web Services (AWS), in 2002, and followed that up by introducing Amazon Prime, its Kindle tablet, and Amazon Fire streaming sticks. It invested heavily in Rivian Automotive, which built a fleet of thousands of electric vans that Amazon drivers use to complete door-to-door deliveries.
Innovation has always been Amazon's strong point. But it's the potential of Amazon Web Services and cloud computing that has me most interested in Amazon stock today.
AWS is the driver
Cloud computing is a fast-growing industry. Grand View Research says the global cloud computing market was valued at $752 billion in 2024, and will rise to nearly $2.4 trillion by 2030 -- a compound annual growth rate of 20.4%. Companies are looking for cloud or hybrid solutions as they incorporate more artificial intelligence (AI) into their internal and public-facing products. AI applications require a lot of computing power, so companies are willing to use cloud providers like AWS rather than investing in costly data centers of their own.
How big is AWS for Amazon? Check out the numbers for the second quarter of 2025.
|
Metric (in Billions) |
North America |
International |
AWS |
|---|---|---|---|
|
Net sales |
$100.068 |
$36.761 |
$30.873 |
|
Operating expenses |
$92.551 |
$35.267 |
$20.713 |
|
Operating income |
$7.517 |
$1.494 |
$10.160 |
|
Profit margin |
7.5% |
4.1% |
32.9% |
|
Sales growth (YOY) |
11.14% |
14.54% |
17.47% |
Data source: Amazon. YOY = year over year.
The e-commerce site brings in the most sales, at more than $136 billion for North America and international combined. But those are also the most costly segments to operate, as Amazon has to move the products out of storehouses, ship them, and then transport them to the customer's door.
Meanwhile, AWS has a profit margin of 32.9%, accounting for more than half of the company's net income of $18.16 billion. Amazon earned $1.71 per share in the second quarter, up from $1.29 per share a year ago. But if it weren't for AWS, Amazon's profit margin would make for a very unappealing investment.
Looking ahead
Amazon is the No. 1 cloud computing company in the world, with a 30% market share topping Microsoft Azure (20%) and Alphabet's Google Cloud (13%). And Amazon is investing heavily to keep that advantage. The company plans to spend $100 billion this year on AI infrastructure, saying it's a "once in a lifetime opportunity." At the same time, the company sees an opportunity to increase its footprint in the international e-commerce market and has been working to increase its infrastructure and global selling program.
From its roots in the Pacific Northwest, Amazon has flourished to become an international juggernaut and one of the most recognized companies in the world. Now with a leading position in cloud computing, Amazon is poised to deliver even more profits in the coming years -- making it an ideal investment for long-term investors.
