This is the Amazon everyone should have feared

A little less than six years ago, I wrote an article with a similar headline to this newsletter.

At the time, Amazon had once again posted its largest quarterly profit in history—$2.5 billion at the time—on the back of its two fastest-growing businesses that hadn’t even existed when Jeff Bezos took the company public: Amazon Web Services and Amazon Advertising.

“An Amazon that is posting growing profits from its non-core business,” I wrote back in 2018, “means an Amazon that can continue to keep prices low and invest in ever-speedier delivery times to widen its defensive moat in its main retail business. That should be a very scary realization for rivals.”

And it mostly has been. Fast forward to last week, when Amazon announced its financial results for the first quarter of 2024. Amazon’s net income surpassed $10 billion for the quarter and would have exceeded $12 billion if not for a $2 billion non-cash expense from its investment in the electric carmaker Rivian.

On the revenue side, its year-over-year growth rates accelerated across the board, for its AWS, advertising, and core e-commerce divisions, respectively. That’s a revenue acceleration even as AWS is on track to surpass $100 billion in annual sales by the end of 2024, while its investments in what could be a transformational technology of generative AI are just ramping up. The law of large numbers doesn’t seem to be holding AWS back.

Meanwhile, Amazon’s ad business should top $50 billion for the first time in 2024, and that’s with the tech giant just starting to really court TV advertisers to buy ads on Prime Video, thanks to its deal to stream NFL games—and, soon, NBA basketball games too.

Over the decade-plus that I’ve covered this company, it’s become common for stock analysts to ask Amazon officials on earnings calls whether the company is currently operating in more of an investing cycle than a profits one, or vice versa. And on last week’s earnings call, an analyst posed such a question once again. But the answer was much different than ever before.

“I think we're in a position to do both is the short answer,” Amazon CEO Andy Jassy said on the call. “I think there's actually an opportunity in our existing large businesses—in the stores business along with advertising and AWS—there's a lot of growth in front of us. And I think we're investing in a meaningful way. But I think…we don't believe that we're at the end of what we can do in terms of improving our cost structure on the store side.”

For the first time in a very long time—maybe in the company’s 30-year history—Amazon is at a point where it can afford “to do both.” That’s noteworthy.

To be clear, the company is facing myriad challenges, including some self-induced. Its plans to reinvent brick-and-mortar shopping through technology haven’t gone as planned. The Federal Trade Commission’s antitrust lawsuit against Amazon, however unlikely, could someday force the company to overhaul its business or even split it into parts. Amazon’s relationship with the hundreds of thousands of sellers who account for 60% of the company’s product sales has probably never been worse no matter what Amazon’s CEO says. And as the nascent generative AI sector has boomed, Amazon has found itself in some instances trailing competitors.

But for today, considering the financial results Amazon is showing, and considering the fact that the company is finally at a size that it can, as Jassy said on the earnings call, both invest aggressively in its future while also pumping out real profits, this certainly feels like the Amazon everyone should have feared.

Again.

Jason Del Rey

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The rest of today’s Data Sheet was written by David Meyer.

This story was originally featured on Fortune.com