Amazon's ad business hits $70B run rate ahead of July 30 earnings

Amazon.com Inc.'s advertising business surpassed a $70 billion annual run rate, adding a third growth engine ahead of the company's July 30 earnings report.

"The advertising business is one of Amazon's fastest-growing segments, yet the company discloses little about its performance, potentially causing investors to underestimate its value," said Sarah Lin, equity analyst at Edgen.

Advertising revenue grew 24% year over year on top of the $70 billion trailing run rate, according to the company's most recent disclosures. The segment's growth outpaced Amazon's core retail business and came close to AWS's 28% expansion in the first quarter. Amazon's total Q2 revenue is expected to reach $198.8 billion, per consensus estimates compiled by Koyfin, with Bank of America maintaining a Buy rating and a $310 price target on the stock.

The limited disclosure around advertising creates a valuation gap that could close if Amazon provides more detail on the segment's margins and trajectory. Amazon reports second-quarter results after the closing bell on July 30, with analysts watching for any additional color on advertising revenue. The stock traded at 28 times trailing earnings, between eBay at 25 times and Etsy at 30 times, as the broader tech sector faced pressure from Alphabet's capex guidance hike earlier this week.

This article is for informational purposes only and does not constitute investment advice.