Slowing AWS revenue growth combined with a declining operating margin - it was 26.2% in the first nine months of 2023, down 380 basis points from a year earlier - suggests that Amazon’s not going to be able to rely on its cloud business in the future as much as it has in the past. On an annualized basis, AWS sales in 2023 are projected to be $88.8 billion ($66.6 billion / 3 * 4), an 11% increase over 2022, a big drop from the nearly 29% growth in 2022. In the first nine months of 2023, they were $66.6 billion, 13.3% higher than a year earlier. The only fly in the ointment is the future growth of AWS. It’s been about growing the Amazon Prime ecosystem like Apple (NASDAQ: AAPL) has done. Its retail business has never been about profits. Historically, it is the AWS cloud business that has driven Amazon’s profitability. Through the first nine months of 2023, they were $32.3 billion, 23.2% higher than a year earlier. While its advertising business has gotten significant media coverage in the last couple of years as its revenues have grown significantly. Does AWS Have Staying Power?Ī recent Motley Fool article pointed out that Amazon’s services segment (Prime, AWS, advertising) generates 56% of its overall revenue compared to 44% for its e-commerce and brick-and-mortar retail sales. Or it might be the beginning of its next leg up. Here are my pros and cons with AMZN stock heading into 2024. Buying AMZN stock today when it’s up more than 71% on the year could be a case of buying at the top. The share price aside, Amazon has a few issues it’s dealing with that aren’t going its way. Even its $1.4 billion tentative iRobot (NASDAQ: IRBT) acquisition - it’s been in limbo since the deal was first announced in August 2022 - looks to have passed inspection with EU antitrust regulators. It’s now 28% away from its June 2021 all-time high of $188.65. With less than a month left in 2023, Amazon (NASDAQ: AMZN) stock is up 71% year-to-date.
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