Amazon.com, Inc. (NASDAQ: AMZN) is primarily known for the massive scale of its e-commerce operation and is the undisputed leader in the field. The company is also known for its Amazon Web Services (AWS) cloud computing, a concept the company pioneered back in 2006. What began as a way to monetize idle room on its servers has quickly grown to become the company's most profitable and fastest-growing business.
In Amazon's most recent quarter, net sales from AWS grew 55% over the prior-year quarter, generating 10% of its total revenue and all of the company's net income. Expansion in its e-commerce operation caused the segment to operate at a loss, with AWS helping subsidize that growth. AWS produced $4.6 billion in revenue and operating income of $1.17 billion. This resulted in operating margins of over 25%.
Competition from the likes of Microsoft Corporation (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ: GOOGL) (NASDAQ: GOOG) is ramping up, and Amazon recently announced that it plans to use machine learning, an application of artificial intelligence (AI), to maintain its lead in this dynamic market.
Source: Fool.com