Amazon (AMZN) stock has rebounded sharply from a March low of $199 to its current trading price of $264, driven largely by robust growth in its cloud computing segment, Amazon Web Services (AWS). During the latest earnings call, management highlighted that AWS accounted for 59% of the company’s first-quarter operating profit, with revenue rising 28% year-over-year to $37.6 billion, marking its fastest growth in 15 quarters. This momentum is further supported by increasing demand for AI tools, which is expected to accelerate customer transitions to the cloud.

The company is also making significant strides in its custom silicon business, with annualized revenue from its chips reaching $20 billion and growing at a triple-digit rate. CEO Andy Jassy indicated that if treated as a standalone business, this segment could potentially generate $50 billion annually, underscoring Amazon’s evolving role in the semiconductor market.

For market professionals, the key takeaway is that continued growth in AWS and the semiconductor division could significantly enhance Amazon’s earnings potential, making the stock an attractive long-term investment despite its current valuation.

Source: fool.com