Amazon Stock Slips 10%: Here's Why It Can Still Finish 2025 With a Market Cap of $3 Trillion
Last week, Amazon (NASDAQ: AMZN) reported its second-quarter earnings. Investors were not enthused. The stock dipped 10% and is now trailing the valuation of its big technology peers, with Nvidia and having market caps of around twice the size of Amazon today. Wall Street is concerned about slower growth in cloud computing and Amazon falling behind in artificial intelligence (AI).
This pins the stock down on one topic when in reality Amazon has all the ingredients to keep growing its profits over the long term, which is what will drive the share price higher. Here's why Amazon -- with a market cap of $2.3 trillion right now -- can finish 2025 valued at over $3 trillion.
The biggest reason for Amazon's profit expansion in its e-commerce division the last few years is advertising. High-margin advertising revenue has grown from $7.4 billion in the second quarter of 2021 to $15.7 billion last quarter, and is still growing 22% year over year. This division has now generated $61 billion in revenue over the last 12 months and has incredibly strong profit margins.
Source Fool.com
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