Prediction: This Is What Amazon's Stock Will Be Worth by 2030 | The Motley Fool

"Amazon is one of the world's most recognizable companies. Its e-commerce platform is responsible for delivering billions of dollars worth of goods every year in over 100 countries around the globe, and has led the e-commerce revolution. However, the e-commerce shift has largely played out, and with artificial intelligence (AI) investing dominating the market, it may seem like Amazon stock is out of favor."

"In Q2, Amazon's North American commerce divisions generated $7.5 billion in operating profit on sales of $100 billion. However, most of that profit likely comes from one unlikely source: digital advertisements. Amazon's advertising services divisions have been rapidly growing behind the scenes, and are a large reason why Amazon's operating profits have improved over the past few years. In Q2, ad services revenue rose 23% year over year, making it the fastest-growing division within Amazon."

"While Amazon doesn't break out the individual operating margins per segment, this division likely has impressive margins. Another advertising-focused business, Meta Platforms, has consistently delivered operating profits between 30% and 45% over the last five years. That's quite a bit higher than Amazon's divisionwide operating margin of 7.5%, so it's likely that the faster advertising service growth rate will continue to improve"

Amazon operates a massive global e-commerce platform that helped lead the online retail revolution, but the e-commerce shift has largely matured. Amazon is heavily involved in AI and benefits from rapidly growing advertising and other high-margin divisions that bolster overall profitability. North American commerce generated $7.5 billion in operating profit on $100 billion in sales in Q2, while ad services rose 23% year over year and became the fastest-growing division. Advertising likely contributes outsized margins relative to commerce, and faster ad-service growth should continue to improve Amazon's profit profile going forward.

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