Thanks to the Amazon Web Services, the online giant's cloud computing business, Amazon reported on Thursday an 81 percent jump in its revenues to $1.8 billion. The business just added $40 billion to Amazon.com's market value to $262.18 billion.
With that development, Amazon overtook Wal-Mart stores in terms of market value, reports Forbes. Wal-Mart's market cap is $233.52 billion.
The company's second quarter report said that Amazon earned $391 million in operating profit from cloud computing which is more than 50 percent of its total $684 million operating profit. Cloud computing contributed less than 8 percent of overall sales of $21.4 billion.
The growing share of cloud computing may require investors to "rethink what Amazon's core business actually is," Forbes points out.
In late 2006, Amazon CEO Jeff Bezos told Forbes that he foresees cloud computing becoming a meaningful business for the company. Thursday's Q2 results is proof "that the seeds we plant can take anywhere from three, five, seven years."
The news boosted Amazon's shareprice by 17 percent, or $80.82, to $563 in after-hours trading, reports Market Watch.
In response to Amazon's overtaking Wal-Mart, the bricks-and-mortar store giant introduced unlimited shipping service at $50 a year. It is about 50 percent of what Amazon Prime service charges. It also announced an upcoming own deals day to match Amazon's Prime Day even which actually did not impressed many online buyers.
Commenting on Wal-Mart's initiatives, Market Watch quotes Piper Jaffray analyst Gene Munster who wrote in a note to clients, "Wal-Mart's attempt to create a competitive offering to Amazon shows the power Amazon is exerting as it gains loyalty and takes share from traditional retailers ... We think Wal-Mart's response to Amazon indicates it is grasping for anything to attack Amazon."
Of course, despite Amazon's $40 billion boost to its market cap, it is dwarfed by Chinese e-commerce giant Alibaba Holdings.