Alibaba is following Amazon's lead in one big way

Business Insider | 4/23/2016 | Sean O'Reilly, The Motley Fool
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Since April 23, 2016, shares of Amazon's have risen 157%. This was no accident. On that day, as part of its first-quarter earnings results, Amazon broke out its Amazon Web Services (AWS) division results for the first time .

The response from investors was dramatic:

Revenue - AWS - Amazon - Source - Speculation

How much revenue AWS actually generated for Amazon had long been a source of speculation. Was the service, a cloud-based data management and storage service, even profitable?

The answer, as it turned out, was a resounding yes.

Quarter - FY - AWS - Revenue - Quarter

For the first quarter of FY 2015, AWS generated revenue of $1.57 billion, up from $1.1 billion for the same quarter in 2014. What's more, in those first three months of 2015, AWS netted Amazon a profit of $265 million on an operating margin of 17%.

Needless to say, Wall Street loved what it saw. Amazon, long known for its lack of interest in near-term profit generation, had built a fast-growing cash cow right under Silicon Valley's nose .

Time - AWS - Q2 - AWS - Sales

In the time since, AWS has continued to deliver. In Q2 2017, AWS sales were $2.89 billion. An eye-popping 42% rise over Q2 2016's showing. Operating income for the division was an astonishing $916 million.

And that brings me to why Alibaba is so attractive today. As investors just learned, it too has created its own extremely profitable, cloud-based storage business.

Alibaba - Results - Quarter - August - Nothing

Alibaba's company-wide results for its first fiscal quarter, reported August 17, 2017, were nothing short of spectacular . BABA reported adjusted earnings of $1.17 a share ( handily beating the estimated $0.92). Total revenue was $7.4 billion for the period, 56% more than the same quarter last year.

While the main headlines all focused on robust e-commerce growth in China, a far more interesting data point was contained in the report: Alibaba Cloud . While still in its infancy, revenue in this department surged almost 100%...
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