Amazon (NASDAQ: AMZN) has gone through a volatile stretch over the last few years. The surge in customers and sales at the pandemic's onset has been followed by decelerating growth and rising costs. Amid all of that was a change in CEOs and a stock split.
But none of the above are reasons to buy. Instead, the green flag I will discuss is the massive customer commitments it has for its lucrative Amazon Web Services (AWS) segment, the primary driver of Amazon's profitability these days.
As of March 31, Amazon's web services segment has contracts with customers for a total value of $88.9 billion. In other words, customers are committed to spending $89 billion on Amazon Web Services over the next few years. To put that figure into context, in its most recent quarter (ended on March 31), AWS generated revenue of $18.4 billion. That was a 37% increase from the same quarter in the prior year. What's more, it was an acceleration of the 32% growth it achieved in the same quarter of last year. Note that contractual obligations turn into revenue as customers use the service they agreed to buy.
Source Fool.com