Amazon made a good revenue in the second quarter of 2016. In the last 20 years Amazon say the turnover grow from 0.5 million to a huge 100 billion dollars. While stockholders didn’t see a lot of that money in those years because Amazon kept investing a large portion of that money.
Amazon made a conscious decision to invest surplus margin into distribution centers, warehousing and long term projects and not to take the profit. So what can we make of the huge profit of 857 million that Amazon reported this quarter. Do they plan to invest less capital in the future? On the contrary Amazon is doing very good and it is mostly because of the online services like the cloud solutions. Amazon is still investing lost of capital and keeps a very huge profit.
This last quarter Amazon booked a revenue of 30.4 billion dollars, 10% of that came from the cloud division AWS. But the AWS division made 56% of the profit. Amazon competes in the cloud based solutions with giants as Microsoft and Google but they already see these companies in the rear view mirror. According to Goldman Sachs in the last 12 months AWS quadrupled the revenue of Microsoft with 8.9 billion against 1.8 from Microsoft and even 15 times the revenue of Google. Here a great article on BusinessInsiderUK for more information.
In the next few years Amazon has lots of capital to invest and it will keep investing in their divisions. They are planning to invest hundreds of millions of dollars in the TV division Prime, billions of dollars into their investments in India and they keep expanding their warehousing and distribution centers
Even Jeff Bezos (founder of Amazon) has enough room to invest in future long term projects like the delivery drones division Amazone Prime Air.
All this is great news for stockholders and investors, cloud is here to stay and Amazon is leading the market in a very healthy way