Here's where Amazon’s profits are coming from (Hint: it's not from online shopping) (AMZN)

pulse

May 2, 2017 10:36 PM

It's all about the cloud.

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When you think of Amazon, you probably think of shopping. It’s the site that sells everything from books to phones to full-on vehicles. Accordingly, the company is the dominant player in e-commerce.

But as this chart from Statista shows, Amazon’s most well-known business isn’t its biggest driver of profits. That would be the company’s cloud computing unit, Amazon Web Services, which accounted for about 89% of Amazon’s $1 billion total operating profit this past quarter. That’s despite AWS accounting for just 10% of the company’s overall revenue during the same time frame.

This isn’t anything new — for years, the story with Amazon was high investments and low margins. Lately though, those investments have started to bear fruit, with AWS, now the number one service in the growing cloud business, being the prime example. In that light, it’s no wonder Amazon is looking to bulk up its cloud unit more than anything else.

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