Fun Fact: Amazon's AWS Contributes More Than 100% Of Its Total Operating Profit

Amazon.com, Inc. AMZN's stock dipped below the psychologically important $1,000 per share milestone last week as investors continue to question the company's outlook after a notable earnings shortfall in its second-quarter report.

Despite a 25 percent increase in sales during the second quarter to $38 billion, Amazon's net income fell 77 percent from a year ago to $197 million, Statista reported. This metric also came in a surprising 72 percent short of what analysts were expecting but also consistent with Amazon's history of prioritizing long-term growth over near-term profits.

Where Did Amazon's Profit Come From?

Amazon's business is split into two main units: e-commerce and the cloud service called Amazon Web Services. In fact, the AWS segment accounted for more than 100 of Amazon's total profit while contributing just 10 percent of Amazon's total revenue, Statista stated.

If anything, this illustrates that Amazon is tackling with a much larger e-commerce business in terms of revenue that comes with "notoriously low" margins. Meanwhile, the highly lucrative AWS segment is a high margin business that also happens to be the market leader in the cloud infrastructure space.

This also raises a question that Amazon may need to clarify sooner rather than later. Now that the cloud segment is making "so much money" is Amazon's CEO Jeff Bezos "running out of ideas" to boost profitability even further?

Source: Statista Related Links:

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