Amazon CEO Andy Jassy Just Made a Wild Prediction. It Could Make the Tech Giant a Big Winner.
Amazon is headed for the trillion-dollar mark in multiple ways.
Following Amazon's earnings report, its stock experienced a 7% decline in after-hours trading on Thursday. Concerns over substantial AI investments have been widespread among major tech companies, leading Amazon to join the list of affected firms. Despite not revising its forecast for $220 billion in capital expenditures (capex) for the year, Amazon disclosed a $42 billion loss in free cash flow over the previous four quarters, indicating the expenses associated with this expansion.
Amazon reported a 12% increase in revenue to $201.9 billion in the third quarter, which was slightly below the estimated $202.3 billion. Adjusting for foreign exchange and Prime Day's relocation from Q3 to Q2, revenue would have grown by 17%. However, investors were not pleased by the earnings, although Amazon's CEO, Andy Jassy, presented a promising outlook for the future.
Jassy predicted that Amazon could become the first company to reach a trillion dollars in annual revenue as soon as next year. He emphasized that there has never been a trillion-dollar revenue business, and he expects two such businesses to emerge within the next 5-10 years. While e-commerce is the larger of Amazon's two businesses, AWS is also expected to grow significantly.
Amazon Web Services (AWS) generated $165.2 billion in revenue over the past four quarters, and the company anticipates at least 40% revenue growth in both 2027 and 2028. This growth would bring AWS's revenue to approximately $330 billion two years from now. With a 20% annual growth rate over the next six years, AWS could potentially reach $1 trillion in revenue.
Despite the post-earnings sell-off, Amazon's stock opened at around 20 times operating income on Friday morning. The company remains a massive player in the global market, with its online retail and cloud computing divisions being the leaders in their respective industries. Amazon's substantial competitive advantages in these areas suggest that it is unlikely to lose its position as a dominant force.
As Jassy foresees, Amazon could have two trillion-dollar businesses in the next decade, making it an attractive investment opportunity for those seeking exposure to these booming industries.
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