Amazon is building the next $100 billion business:
Is Amazon Prime membership worth it? See benefits and benefits
Do I need to sign up for an Amazon Prime membership? Find out the best perks and some hidden benefits that come with being an Amazon Prime member.
For years, Amazon (NASDAQ: AMZN) The story focuses on e-commerce and cloud computing. But another engine is speeding up. It’s a high margin, rapidly growing, and still underrated engine. That’s an ad on Amazon.
What makes this business so powerful is its strategic position at the intersection of intention, data and trading. When Prime Video turns on ads, Amazon is unlocking a powerful new tier of monetization.
This new business is more than just an additional revenue stream. It is a strategic opportunity and could significantly change Amazon’s long-term outlook.
Why ads make perfect sense for Amazon
Founded as an online bookstore, Amazon has evolved into a large conglomerate with multiple business engines. One of the most promising of these businesses is Amazon Advertising.
Advertising has strategic implications for Amazon. This is because the company is taking advantage of what it is already doing its best. In other words, it captures intentions and translates them into actions. This creates rare, central digital real estate where brands are eager to pay. Amazon doesn’t need to build new traffic sources or create new content. It just monetizes what’s already happening on the platform.
What’s more, what sets Amazon apart is its closed loop attribution. Marketing speaks to track every part of a customer’s experience with advertising. It’s not just about showing ads. It sees what to convert, up to the product, basket size, and repetition frequency. This makes advertising platforms the most efficient in the world.
So at the heart of Amazon’s advertising model is the ability to monetize consumer intent using a vast amount of shopping, search and behavioral data. This is part of a wider retail media trend that helps retailers use first-party data to help brands target customers more effectively than traditional platforms. Amazon’s scale and data make you one of the most powerful players in this field.
Amazon Ads by Numbers
Amazon’s advertising division is more than just a side hustle. It is becoming an important factor in revenue growth.
In 2024, Amazon generated $56 billion in advertising revenue, up 18% from the previous year. This makes it the third largest digital advertising company in the world, after only Alphabet’s Google and Meta platforms. Momentum continued in the first quarter of 2025, with Amazon Ads generating $13.9 billion, up nearly 18% year-on-year, while the company’s total revenues rose just 9%. The gap highlights how ads grow faster than Amazon’s traditional business.
Amazon doesn’t make advertising profitable, but this business has a higher operating margin than its e-commerce or logistics business. In other words, advertising gradually increases our operating profit margin over the long term.
Looking ahead, the marketing consultant WARC project is projecting that Amazon’s retail media advertising revenues exceed $67 billion this year, potentially reaching $79 billion by 2026. If Amazon ads can maintain this momentum, it won’t take long for the ads to end $100 billion work.
Amazon ads will appear here
Amazon’s advertising business may already be quite impressive, but it is in the early stages of development.
The bedrock of Amazon Ads consists of sponsored ads related to high-purpose shopping behaviors. As long as the e-commerce business continues to grow, so will our advertising business. However, Amazon has expanded beyond its ecommerce product page to other parts of its ecosystem.
One of the key growth drivers is streaming. In 2024, Amazon introduced ads to Prime Video, giving immediate access to over 200 million viewers worldwide. The Bank of America project believes Prime Video can generate $3.5 billion to $5 billion in advertising revenue in 2025. Combining it with Twitch, Fire TV and Live Sports, Amazon can build one of the most valuable connected TV ad platforms on the market.
But Amazon hasn’t stopped there. The new Retail Advertising Services Initiative opens advertising technology to other retailers and turns internal tools into Software as a Service (SAAS) business. This is similar to how you can extend your internal cloud computing expertise to external users and build large-scale Amazon Web Services (AWS).
In other words, as more ad formats unfold and more advertisers take part, Amazon’s ad flywheel will continue to spin, creating a comprehensive advertising ecosystem that covers every part of the consumer’s journey.
What does this mean for investors?
Amazon may be best known for its e-commerce and cloud computing business, but its advertising business is quickly becoming a major force. If momentum continues, ADS could become one of Amazon’s most valuable profit engines.
If you are a long-term investor, this is a business segment worth paying attention to as it will affect your decisions about Amazon.
Bank of America is the advertising partner of Motley Fool Money. Lawrence NGA has no position in any of the stocks mentioned. Motley Fool has appeared on and recommended Alphabet, Amazon and Meta platforms. Motley Fools have a disclosure policy.
The Motley Fool is a partner at USA Today, providing financial news, analysis and commentary designed to help people control their financial lives. The content is produced independently of USA Today.
Should I invest $1,000 in Amazon now?
A miscellaneous fool’s offer: Consider this before purchasing stock on Amazon.
Motley Fool Stock Advisor The analyst team has identified what investors believe to be the 10 best stocks to buy now. The 10 stocks that have made the cut could potentially generate monster returns over the next few years.
Consider when Netflix created this list on December 17th, 2004… If you invested $1,000 at the time of recommendation, you’ll have $636,628! * Or when Nvidia created this list on April 15, 2005… if you invest $1,000 at the recommended time, then $1,063,471!
Now it’s worth noting Stock Advisor The total average return is 1,041% – outperformance that breaks the market compared to 183% of S&P 500. Don’t miss out on the latest Top 10 list available when participating Stock Advisor.
View 10 shares »
