This Stock Could Benefit From a Major Industry Shift Over the Next Decade | The Motley Fool

"Amazon currently has a market capitalization of approximately $2.5 trillion and ranks as the world's fifth-largest company. The tech giant leads the market in categories including e-commerce and cloud infrastructure services. It also operates a fast-growing digital advertising business. Despite the company's many strengths, Amazon has actually significantly underperformed the broader market over the last half-decade. The company's share price has risen roughly 44% over the last five years, but the S&P 500 and the Nasdaq Composite have risen 79% and 73%, respectively."

"Amazon Web Services (AWS) continues to be Amazon's biggest profit generator. The company's market-leading cloud-infrastructure service boasts impressive margins and has kept growing at an encouraging pace. AWS revenue increased 20% year over year in last year's third quarter, and it accounted for $11.4 billion of the company's $21.7 billion in non-GAAP (generally accepted accounting principles) adjusted operating income (almost 53%). Meanwhile, the AWS segment accounted for just $33 billion of the company's $180.2 billion in Q3 revenue (about 18%)."

"Amazon's e-commerce business continues to generate the large majority of overall sales, but the high costs associated with the online retail business mean that profit margins remain far below what the company's cloud and advertising businesses are delivering. The online retail business will remain relatively capital-intensive compared to those divisions, but there's also a good chance that it will see powerful margin gains over the next five years and beyond."

Artificial intelligence, robotics, and automation could reshape the retail industry. Amazon has an approximate market capitalization of $2.5 trillion and ranks as the world's fifth-largest company. Amazon leads e-commerce and cloud infrastructure and operates a growing digital advertising business. Amazon's share price rose about 44% over the last five years, lagging the S&P 500 and Nasdaq Composite. Amazon Web Services is the largest profit generator, growing about 20% year over year in Q3 and contributing roughly $11.4 billion of $21.7 billion in adjusted operating income. E-commerce drives most sales but carries higher costs and lower margins, with potential for margin improvement.

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