Amazon (NASDAQ: AMZN).
It’s the world’s 4th largest company by market cap. And by next year it’ll surpass Walmart (NYSE: WMT) in terms of annual sales.
Shares have surged from its $1.50 IPO price to $3,130 today.
That’s a 20,587% return – turning just $500 into over $1 million.
Yet Amazon’s biggest gains are now in the rear-view mirror.
Amazon Owns Shocking 40% of E-Commerce
Amazon started as an online bookseller and has morphed into an e-commerce giant.
Today Amazon has more than a 40% market share in U.S. e-commerce. The #2 player is Walmart – with a 6% market share.
However, Amazon’s core e-commerce business is unprofitable. The company regularly sells products at prices that undercut competitors – both online and in retail.
Additionally, Amazon is spending huge amounts to build out its logistics and delivery operations. You can see this in the company’s capital expenditures – also known as “CapEx.”
CapEx jumped over 50% last year – topping $60 billion.
This includes buying airplanes, delivery trucks and vans. And opening more delivery centers. The goal is to provider faster delivery times for customers – without being dependent upon FedEx (NYSE: FDX), UPS (NYSE: UPS) or the U.S. Postal Service.
Chairman Jeff Bezos never focused on running a profitable company. Instead, he was always willing to reinvest the cash flow to build a better, bigger, stronger and more resilient business.
Historically – investors haven’t seemed to really care. Bezos prepped investors back in the 90’s when he came up with a simple mantra for the company: “Get big fast.”
But here’s the thing…
Amazon has one aspect of its business that is VERY profitable and very valuable. And it’s invisible to most folks.
In 2006 Amazon launched a division named Amazon Web Services – or AWS.
Basically, the company decided to rent out its web servers to other companies. This allowed Amazon to leverage its technology investment – and have other companies offset the cost.
Today we call this cloud computing.
AWS generated $18 billion in revenues and $5.3 billion in operating income last quarter. And it’s growing at an impressive 40% per year!
Today AWS is worth at least 10-times sales – or around $710 billion.
This means roughly one-half of Amazon’s market value is connected to AWS.
Given the rapid growth – AWS could be worth over $1 trillion within the next year.
Read Daily Profit tomorrow morning for my outlook and price target on Amazon.
One thing is clear: the biggest profits from the FANG stocks are a thing of the past.
That’s why I’m focused on uncovering the next generation tech stock winners. And buying these stocks could be like jumping into Apple, Google, or Netflix 10+ years ago.
They’re called MACE stocks.
Access my urgent LIVE webinar to discover:
- What exactly are MACE stocks – and why you have not heard of them
- When these MACE stocks could become household names
- Details on 5 of these next generation tech stocks
- How these stocks could crush FANG stocks in the next 3 years
- Why I’m planning to bet $100,000 of my personal savings on these stocks
Yours in Wealth,
Full Disclosure: Ian Wyatt owns shares of Facebook, Amazon, Apple, Netflix and Google.