Amazon’s burgeoning advertising business is set to put its previously unassailable cloud computing division in the shade as early as 2021, according to a new projection of future profits. Analysts are optimistic that the online retailer’s share of internet advertising has enormous untapped potential that could be harnessed in the years ahead, recalibrating the entire orientation of the online retailer in the process. The prophecy was made by analyst Michael Olson in a note to clients. He wrote that advertising was “…: quietly growing into a massive driver of current and future profitability”, adding: “By 2021, we believe it is likely that advertising operating income will exceed AWS. "Investors should be focused on Amazon advertising now; this is a major driver to results and valuation today and continuing in the coming quarters and years." This bullish prognosis has fed through into an increase in Amazon shares as investors digest the implications of a potential $16bn operating income from Amazon’s ad business by 2021, exceeding the $15bn total take predicted for Amazon Web Services in that year. Driving this optimism is a belief that market share in product search is already above 50% while the division containing Amazon’s ad business saw sales surge 72% over the second quarter, putting the retail giant in an enviable position to profit from the trade promotion and merchandising budgets of marketers. Just last month Amazon said its advertising business was now worth $2.2bn and has already overtaken Alphabet to become the second most valuable company in the US. // Featured in this article
Amazon 's advertising revenue will overtake income from its cloud computing division by 2020 , according to financial analyst # ##wire . His prediction is for the online retailer 's ad business to be valued in $ 16bn by 2021 , exceeding the $ 15bn projected for Amazon Web Services ( AWS ) . Last month the company announced that its ad revenue was worth $ 2.2bn , with revenue of over $ 2bn in Q1 of revenue and sales increasing in Q2 by 72 % .