Why Is Everyone Talking About Amazon Stock? – Motley Fool

Why Is Everyone Talking About Amazon Stock? – Motley Fool

Amazon‘s (NASDAQ:AMZN) stock rallied over 70% this year, making it the hottest stock in the FAANG cohort, which also includes Facebook, Apple, Netflix, and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL).

Wall Street also remains overwhelmingly bullish on Amazon, with an average price target of more than $3,700 per share — which is nearly 20% above its current price. Let’s see why analysts still love Amazon, even after its valuation hit $1.6 trillion, and why its stock could still have room to run.

An Amazon Go store.

Image source: Amazon.

Amazon Web Services

Amazon’s cloud unit AWS (Amazon Web Services) grew its revenue 31% year-over-year to $21 billion, or 13% of Amazon’s top line, in the first half of 2020. That revenue growth was already robust, but AWS’s operating profit surged 48% to $6.4 billion and accounted for 65% of Amazon’s operating income.

That growth is impressive for two reasons. First, AWS is already the world’s top cloud infrastructure platform with a 31% market share in the second quarter of 2020, according to Canalys, and its continued growth keeps it ahead of competitors like Microsoft‘s (NASDAQ:MSFT) Azure, Alphabet’s Google Cloud, and Alibaba (NYSE:BABA) Cloud.

Second, most of AWS’ competitors aren’t profitable. Alibaba operates its cloud business at a loss, while many analysts believe Microsoft and Google, which don’t disclose their cloud profits, are likely taking losses. AWS can consistently generate profits because it has a first-mover’s