When it comes to e-commerce, Amazon (AMZN +0.53%) is without equal. The company is the undisputed heavyweight champion of digital retail, with gross merchandise volume (GMV) of $790 billion in 2024. Despite the gargantuan size of its business, sales continue to grow, up 10% year over year in the third quarter. Amazon has risen through the ranks to become the world's second-largest retailer, behind only Walmart.
Yet, that's just the tip of the iceberg when it comes to Amazon's future growth potential. The massive cash flow from its online sales subsidizes a growing suite of opportunities that are the envy of the business world. Significant optionality is one reason Amazon will thrive in 2026.
Image source: Amazon.
A Jack of all trades
Amazon Web Services (AWS) remains the leader of the cloud infrastructure industry it pioneered. In Q3, the company commanded a 29% share of the market, well ahead of Microsoft Azure and Alphabet's Google Cloud, with 20% and 13%, respectively. Furthermore, AWS revenue accelerated 20% year over year in the third quarter, generating 18% of the company's total revenue and 60% of operating income, showing there's still room to run.
Advertising has been an area of focus for Amazon in recent years, and the company is seeing the fruit of its labors. The company generates ad sales from its e-commerce platform and Prime Video, as well as its live sports programming, among others. Amazon is now the world's third-largest advertiser, behind Google and Meta Platforms. Ad revenue increased 24% in Q3, accounting for 10% of Amazon's total revenue.
NASDAQ: AMZN
Key Data Points
Another arrow in Amazon's quiver is subscription services. Customers pony up for membership in Amazon Prime, as well as digital music, audiobook, e-book, and other subscription services. Subscription revenue grew 11% year over year, accounting for 7% of the total.
Amazon doesn't break out sales related to artificial intelligence (AI), as that revenue gets folded into AWS, advertising, and e-commerce.
There's more, but you get the picture. Amazon has a long and growing list of ways the company can win. And at 32 times earnings, it's attractively priced.
