Cash in the Amazon

For over a decade, Amazon was the odd one out when it came to profit margins amongst the big tech giants. Online retail is a high volume, low-margin business and Amazon could not compete with the software leaders when it came to free cash flow generation. But that has started to change. Take a look at the image below, showing the massive surge in cash flow that is underway at Amazon.

Ironically, much of that upside comes from a business that is only possible because of their online retail store, and that is advertising. Although it's now only 9% of sales, advertising most likely contributed a large amount to these free cash flows due to its high margins.

Of course, AWS has been holding the fort for a while now when it comes to providing Amazon with large doses of cash. But now there are two stalwarts, and it's making a big positive difference to the company's finances.