Think Amazon Is Expensive? These 3 Charts Might Change Your Mind.

With a market capitalization of $2 trillion, Amazon (NASDAQ: AMZN) is now one of the most valuable companies in the world. Many investors think it's too late to buy in. But the charts below show that one of Amazon's biggest growth opportunities in history still lies ahead, giving new investors plenty of time to take advantage.

Amazon is set to become an AI company

Most people think of Amazon as an e-commerce business. And it is. By revenue, it is the second-largest retailer in the world. But there's another business segment that is even more exciting than e-commerce: Amazon Web Services (AWS).

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After years of strong growth, AWS is now the largest cloud infrastructure provider in the world, with an estimated 30% global market share. Demand for cloud computing infrastructure has taken off in recent years, boosted by rapid investment in AI technologies, which rely on cloud infrastructure to train, deploy, and execute models and machine learning.

In 2020, AWS contributed roughly 10% of Amazon's total revenue. Today, it contributes more than 15%, making it an increasingly important part of the Amazon story. But when we look at operating profits, the case for AWS' value gets even stronger.

Amazon Revenue, data by YCharts.

In recent years, AWS has contributed more than half of Amazon's total operating profits. So, while it still accounts for a minority of the company's sales, this division is crucial to its profitability.

With a 30% global market share, AWS can provide more infrastructure to customers than any other network. And its scale and name-brand recognition give it operating efficiencies that even its other Big Tech competitors can't match. The growth in AWS is a big reason Amazon's profit margins reached all-time highs last quarter.

Is Amazon stock pricey at 34 times earnings? Compared to the market, yes. But the AI revolution will unfold for many, many years to come. With AWS becoming a bigger and bigger story for Amazon, the stock still isn't too expensive for patient investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.