The Hidden Growth Engine Inside Amazon No One Is Talking About

Amazon (NASDAQ:AMZN) dominates as an e-commerce and cloud services giant. Its online retail operations generate the bulk of revenue, while Amazon Web Services (AWS) drives most of the profits through high-margin cloud computing. In the third quarter, net sales reached $180.2 billion, with AWS contributing $33 billion.

However, Wall Street and investors often overlook another segment: Amazon’s advertising business. This unit, which includes sponsored products, display ads, and streaming video ads, posted $17.7 billion in revenue for the quarter, up 23.5% year-over-year. Though smaller than e-commerce or cloud, advertising is growing faster and could become a key contributor to both top-line expansion and bottom-line strength.

Advertising Revenue Hits New Highs

Amazon’s advertising segment has shown consistent acceleration. In Q3, the 23%-plus gain marked the third straight quarter of increasing growth rates. This outpaced AWS’s 20% rise and the company’s overall 12% revenue increase. Earlier in the year, Q2 saw 23% growth to around $15.7 billion, highlighting the unit’s momentum. Analysts project Amazon’s global ad revenue to surpass $60 billion for the full year, up 18.6% from 2024.

The business benefits from Amazon’s vast ecosystem. Sponsored ads on the shopping platform allow brands to target users based on search and purchase data, yielding high returns. Margins here rival AWS, as advertising requires minimal incremental costs. Expansion into connected TV and partnerships, like with Roku (NASDAQ:ROKU) and Disney (NYSE:DIS), have broadened Prime’s reach. In the third quarter, this helped advertising become Amazon’s fastest-growing major segment for multiple quarters.

Prime Video’s Ad Boom Steals the Spotlight

A standout driver is the ad-supported tier of Prime Video. Launched with ads as the default in early 2024, it now reaches 315 million monthly ad-supported viewers worldwide, up from 200 million a year ago. This surge reflects strong user engagement and advertiser interest in premium streaming inventory.

In the U.S., Prime Video boasts over 130 million monthly ad-supported viewers. Ads appear during shows and movies, with options for users to pay extra for ad-free viewing. This model has boosted revenue without alienating the core Prime base, as they prioritize Amazon’s shopping perks. That’s not the case at other services, where ads degrade the viewing experience, but the companies have nothing to offer as a bigger draw to keep them subscribed.

Prime Video’s growth contributes meaningfully to advertising totals. While Amazon does not break out streaming ad revenue separately, the viewer jump aligns with overall ad acceleration. Executives highlight live sports, like NFL Thursday Night Football, as key ad draws.

Prime Video Is Outpacing Even Netflix

Compare this to Netflix (NASDAQ:NFLX), the streaming leader with over 300 million global subscribers as of mid-2025. Netflix stopped reporting exact subscriber counts after 2024, but estimates peg it at 301.6 million. Its ad-supported tier, introduced in 2022, now has 190 million monthly active viewers worldwide. That’s up from 94 million in May 2025, showing solid growth but trailing Amazon’s 315 million.

Amazon’s scale dwarfs Netflix’s ad tier, potentially giving it more subscribers exposed to ads. Netflix focuses on ads as a lower-price entry, while Prime Video bundles with broader Prime benefits. Still, Amazon’s viewer base positions it to capture more ad dollars in streaming, a market projected to grow rapidly.

Though advertising remains under 10% of Amazon’s total revenue, its 23% growth rate makes it a top performer. For Q3, it helped drive operating income to record levels.

Key Takeaway

Most people join Prime for free delivery from Amazon’s e-commerce site, not primarily for streaming video. This makes direct comparisons with Netflix imperfect — it’s not apples-to-apples.

However, Prime Video is quickly becoming a lucrative business as advertisers flock to its large, engaged audience. While it won’t reach the scale of e-commerce or cloud, it pads Amazon’s top and bottom lines,adding another layer to why Amazon’s stock deserves a spot in portfolios as a long-term holding.