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Amazon's Cloud Business Rose 81 Percent in Q2, Its Fastest Growing and Most Profitable Business

Cloud computing is the most profitable thing that Amazon does.


Amazon Web Services, the cloud computing unit of the Web retail giant, grew its revenue by 81 percent year on year in the second quarter. It grew faster and with higher profit margins than any other aspect of Amazon’s business.

AWS, which offers leased computing services to businesses, posted revenue of $1.82 billion, up from $1 billion a year ago, as part of its second-quarter results.

By comparison, retail sales in North America grew only 26 percent to $13.8 billion from $11 billion a year ago.

The cloud computing business also posted operating income of $391 million — up an astonishing 407 percent from $77 million at this time last year — for an operating margin of 21 percent, making it Amazon’s most profitable business unit by far. The North American retail unit turned in an operating margin of only 5.1 percent.

The AWS profit margin has also risen despite price competition from the likes of Google, Microsoft and IBM. Last quarter, the operating margin at AWS was closer to 17 percent.

If it were broken out as a separate business — something that some investors may want but which Amazon has no intention of doing — AWS would be on track to reach about $7 billion and change in revenue this year.

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