--- title: "Amazon Generated $202 Billion in Quarterly Sales. Most of Its Operating Profit Came From Just 1 Business." type: "News" locale: "en" url: "https://longbridge.com/en/news/304881744.md" description: "Amazon reported $202 billion in quarterly sales, with Amazon Web Services (AWS) driving 63% of operating profit despite comprising only 23% of revenue. AWS's high margins stem from cloud computing economies of scale, contrasting with e-commerce's lower profitability. However, AWS growth requires massive capital expenditures, projected at $220 billion for 2026, raising investor concerns about overspending. Consequently, Amazon's stock valuation has dropped to a P/E multiple of 21.6, near multi-year lows, presenting a potential opportunity or warning sign for investors betting on AWS's long-term future." datetime: "2026-11-09T16:00:13.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/304881744.md) - [en](https://longbridge.com/en/news/304881744.md) - [zh-HK](https://longbridge.com/zh-HK/news/304881744.md) generator: "portal-rs" --- # Amazon Generated $202 Billion in Quarterly Sales. Most of Its Operating Profit Came From Just 1 Business. Take a moment and think about the last time you used **Amazon** (AMZN +4.15%). Did you buy something? Pay for something to watch on Amazon Prime? Maybe you checked on the status of a package? All of these services make it easy to think of Amazon as an e-commerce business. However, the company's latest results reveal something many people may not fully grasp: Most of its profit comes from a segment many people never knowingly use. It's Amazon Web Services (AWS), and it deserves a place in the sun. ![A smiling person in a data center room.](https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84OTM1NjEvZ2V0dHlpbWFnZXMtZGF0YS1jZW50ZXItYW16bi5qcGcmdz0zODQw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Image source: Getty Images. ## Amazon rents the technology other businesses need Explaining AWS and what it does can get complicated, so think of it this way: AWS rents out the computing power and storage businesses need to run online services. By renting, businesses can save money by avoiding the cost of building and maintaining the expensive equipment and facilities needed to run websites, store customer data, or support applications. In addition, as artificial intelligence (AI) grows, AWS is becoming increasingly important. Organizations are scaling up their use of AI, and AWS provides much of the technological muscle to meet the surging demand. This raises an interesting question: How important is AWS to Amazon? ## AMZN - Amazon $270.07+$10.77 (+4.15%) NASDAQ · As of 10:36 AM ET 11/09/26 Premium Feature Moneyball Superscore88/100 ### Key data points Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.$2.80T Day's range$268.81 - $275.34 52wk range$196.00 - $287.20 Volume18.3M Avg volume38.6M Gross margin51.37% ## A smaller share of sales produces most of the operating profit The answer is very important. AWS comprises about 23% of Amazon's revenue, but it contributes 63% of Amazon's operating profit. Therefore, AWS is a central concern for Amazon investors. When one segment drives roughly two-thirds of a company's profitability, investors scrutinize that segment's health. One reason AWS stands out is the nature of Amazon's overall business. Its e-commerce segment drives a staggering amount of revenue, roughly $650 billion. However, historically, it hasn't been very profitable. Even with a recent widening, it generates an operating margin of about 8%. AWS, in contrast, has always been lucrative. Its operating margin stands at about 38%. The reason is simple: Cloud computing benefits from enormous economies of scale. Once a data center is operational, it can take on many new clients. Those customers often sign enterprise subscription agreements with Amazon, delivering steady, highly profitable revenue. E-commerce, in contrast, is less profitable because of logistics, physical labor, and fuel costs. ## Growing this business comes with a very large bill However, AWS has a downside: its cost. Adding new facilities and equipment to fuel AWS's growth is expensive -- *extremely* expensive. It requires construction of enormous buildings, electrical systems, state-of-the-art equipment, and research. In the end, it means hundreds of billions of dollars -- $220 billion for 2026 -- in capital expenditures for the company. ![AMZN Capital Expenditures (TTM) Chart](https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/c706b045ef574e295f07e6fdb46b7959.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) AMZN Capital Expenditures (TTM) data by YCharts. The point is that Amazon hopes to recoup this money many times over as the demand for AWS's services continues to grow, but, in the short term, markets are increasingly concerned that Amazon could be overspending. ## Amazon's valuation is nearing multi-year lows While Wall Street might fret over the size of Amazon's capital investments in AWS, its stock valuation could be a signal to investors. It currently trades at a price-to-earnings (P/E) multiple of 21.6. That's well below its three-year average of 39.3, and it's approaching its all-time-low P/E multiple of 18.2. In other words, Amazon's giant investment spree could present long-term investors with a historic opportunity, or its low P/E multiple could be a warning sign. We simply don't know. ## Buying Amazon stock today is a bet on AWS's future When someone buys Amazon stock, they're not just buying an e-commerce company. Indeed, as Amazon's latest capital investments prove, the company is betting big on AWS. Amazon is as much a technology services supplier as it is a retailer. Buying Amazon stock now means believing in the company's vision: that its colossal investments in AWS will not only pay for themselves, but also lay the groundwork for decades of profits to come. ### Related Stocks - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [AMAA.US](https://longbridge.com/en/quote/AMAA.US.md) - [AMZD.US](https://longbridge.com/en/quote/AMZD.US.md) - [AMZG.US](https://longbridge.com/en/quote/AMZG.US.md) - [AMZO.US](https://longbridge.com/en/quote/AMZO.US.md) - [AMZP.US](https://longbridge.com/en/quote/AMZP.US.md) - [AMZU.US](https://longbridge.com/en/quote/AMZU.US.md) - [AMZW.US](https://longbridge.com/en/quote/AMZW.US.md) - [AMZY.US](https://longbridge.com/en/quote/AMZY.US.md) - [AMZZ.US](https://longbridge.com/en/quote/AMZZ.US.md) - [AZYY.US](https://longbridge.com/en/quote/AZYY.US.md) ## Related News & Research - [Future Ready 2030: Amazon Is Helping More People Build Skills for New Careers in AI, Robotics, and Beyond | AMZN Stock News](https://longbridge.com/en/news/305340700.md) - [Amazon (AMZN) Unveils Two New Ring Security Robots](https://longbridge.com/en/news/305168408.md) - [Andy Jassy Just Delivered Magnificent News for Amazon Investors](https://longbridge.com/en/news/304266561.md) - [Amazon Housing Fund marks five years, $2.7 billion deployed to create or preserve more than 27,000 affordable homes](https://longbridge.com/en/news/305331312.md) - [Deerfield Management Announces Collaboration with AWS to Accelerate AI-Driven Healthcare Innovation and Care Delivery](https://longbridge.com/en/news/304865054.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**