Analysts at Jefferies sees continuing momentum in all segments and operating efficiencies across fixed costs, such as infrastructure and workforce. “As Amazon continues to grow in scale, leverage in the model is beginning to show up in results. Investment in infrastructure (both fulfillment and AWS) and headcount decelerated in Q2 despite usage growth ahead of revenue growth as both AWS and retail achieved better infrastructure efficiencies. Continuing mix shift to 3P sales and solid ad revenue growth (at much higher margins) are helping profitability too. No question the company continues investing in many areas (international, AWS, ad business) and profitability will remain lumpy quarter to quarter but the Q2 print shows the power of the model at scale.”

The analysts added that the dominance of higher-margin AWS continues to afford Amazon the luxury of investing significantly back into the core commerce business, creating a virtuous cycle for both Amazon and its investors. Furthermore, the advertising business is also maintaining momentum.

This analysis is shared by Nomura: “ We continue to believe the composition of Amazon's sales growth signals its future margin trajectory, putting it on a march to increasing (& underappreciated) profitability, w/2Q18 representing the company’s largest margin expansion in ~two years " Analysts at Nomura even wonder whether Amazon has actually reached a size that makes it difficult to “outspend” sales growth, suggesting that, looking ahead, leverage could come from GM and SG&A.

The future has never looked so bright for Amazon.