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Most added FY2027 cloud capacity and some FY2028 capacity were described as reserved.
Capital expenditure to depreciation remains above 1.8x in FY2029.
Sell: the report-date price exceeds Fair value. Prolonged capital spending is the main risk, while reserved cloud capacity is the clearest route to stronger sales and cash.3
For an ordinary investor, Sell means reducing or exiting exposure rather than initiating or increasing a position.
The report was prepared at $258.51 on 2026-09-04. Fair value of $183.76 and Potential value of $225.57 both carry the 2026-09-08 valuation date.3
The main risk is that capital spending remains structurally elevated after capacity deployment. Under that downside assumption, depreciation and reinvestment pressure would delay free-cash-flow recovery.
The clearest upside is profitable use of reserved cloud capacity. That would raise AWS sales, improve business mix, and release more cash as the build slows.4
Management linked Graviton to greater AWS attractiveness, while AWS generated $128.73 billion of FY2025 revenue.47
Demand remains ahead of available cloud capacity, and reservations extend into FY2028. Added power can remove supply limits and support cloud revenue if customers use the capacity profitably.4
Sell because the report-date price stands above Fair value while the capital build still suppresses owner cash.3
Sell because the report-date price stands above Fair value while the capital build still suppresses owner cash.3
AMAZON COM INC serves consumers through its online and physical stores and focus on selection, price, and convenience. AMAZON COM INC designs its stores to enable hundreds of millions of unique products to be sold by us and by third parties across dozens of product categories. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services through North America-focused online and physical stores. This segment includes export sales from these online stores.
The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services through internationally-focused online stores.
The central stress is prolonged construction without matching use. Capital spending absorbs operating cash, depreciation rises, and free cash flow stays weak.
Amazon’s Narrow moat rating rests on proprietary cloud-compute technology. In Q2 2026 remarks, management linked Graviton to greater AWS attractiveness. The evidence does not establish switching costs, pricing power, or durable cash returns.
In Q2 2026 remarks, management said most FY2027 capacity and some FY2028 capacity were reserved. This is management-reported demand visibility, not realized use, switching costs, or proof of durable returns. North America’s FY2025 revenue scale is not itself a moat source.
FY2025 capital expenditure reached $131.82 billion while free cash flow was $7.70 billion. The creates value only if deployed capacity later earns durable cash returns.
The highlighted cell is Fair value when every assumption sits at its base level ($183.76). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $12.0B after modeled reinvestment of $67.3B, with terminal value at 70.6% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to , reinvestment, or resets materially.
Cloud use and cash must improve.
Meeting forecasts would still leave the shares above assessed Fair value.
Capital expenditure increased from $52.73 billion in FY2023 to $131.82 billion in FY2025. In Q2 2026 remarks, management expected roughly $220 billion of FY2026 cash capital expenditure.46
In Q2 2026, management said cloud demand exceeded available capacity and reported reservations extending into FY2028. Added power could remove supply limits if those reservations become sustained customer use.
New capacity could arrive before profitable use. Depreciation and reinvestment would stay elevated if slower sales growth leaves infrastructure underused.
Minimal or zero exposure under the Sell rating because the report-date price exceeds Fair value and Potential value.. The report-date price is above Fair value and Potential value, while cash recovery still depends on successful capacity use.3
Keep the Sell stance and do not increase exposure. Exit if AWS growth falls below 15% for two consecutive fiscal years through FY2029. Reconsider only after diluted shares stop rising and free cash flow improves for two fiscal years.
The report-date price exceeds both Fair value and Potential value.3
Reserved cloud capacity supports growth, but the evidence does not yet establish utilization economics beyond FY2028.4
High capital expenditure and low FY2025 free cash flow leave the thesis dependent on a later cash recovery.5
Sell: the report-date price of $258.51 exceeds Fair value of $183.76 and Potential value of $225.57.3
In Q2 2026, management reported cloud-capacity reservations through FY2028. That provides dated demand visibility, but FY2025 high capital spending had not yet produced strong free cash flow.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
This path gains force if AWS growth falls below its test after the Q2 2026 management-reported reservation window. It also gains force if FY2027 adjusted diluted EPS falls below the forecast range’s lower bound.
If capital expenditure to depreciation stays above 1.8x in FY2029, depreciation and reinvestment remain elevated, delaying the planned recovery in owner cash flow.56
AWS growth below 15% for two consecutive fiscal years would signal weak utilization, reducing cloud-mix support for consolidated revenue and profit.47
FY2027 adjusted diluted EPS below $8.70 would show that revenue growth is not converting into per-share earnings, weakening the expected recovery.1
A cost of equity above 11.7639% would make long-dated earnings worth less before operating gains could offset the higher required return.2
The five developments that would weaken our investment case.
A breach would show that the construction phase has not normalized. More operating cash would remain tied up in assets, while depreciation and reinvestment delay free-cash-flow recovery.
Current:FY2025 capital expenditure was $131.82 billion, about twice depreciation.
Alert ifAbove 1.8x in FY2029.
Because management’s Q2 2026 remarks describe reservations rather than realized use, weak conversion would reduce AWS sales and the expected cloud-mix lift to consolidated profit.
Current:Most FY2027 capacity and some FY2028 capacity were described as reserved.
Alert ifAWS annual revenue growth below 15% for two consecutive fiscal years through FY2029.
A result below the defined range would show that Amazon's revenue is not overcoming investment, margin, tax, or dilution pressure at the per-share level.
Current:The FY2027 provider-adjusted diluted EPS forecast ranges from $8.70 to $15.04 per share, with a $10.49 mean, as of 2026-09-08.
Alert ifBelow $8.70 per diluted share for FY2027.
A higher required return would reduce what investors pay for distant earnings while heavy capital spending still delays near-term cash.
Current:9.7639% as of 2026-09-08.
Alert ifAbove 11.7639% within 12 months.
Sustained weakness would directly reduce the contribution from Amazon’s largest operating segment and weaken consolidated revenue growth. The evidence does not by itself establish a specific pricing or delivery-spending response.
Current:$426.31 billion of FY2025 revenue.
Alert ifBelow 5% annual growth for two consecutive fiscal years through FY2030.
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Project SBC-adjusted EPS, discount each year's earnings at cost of equity, then add a Gordon-growth terminal value.
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Apply a terminal P/E to the dated forward EPS path, then discount that future share value back to the analysis date.
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and at , then adjust for signed per current share.
Solve for the growth rate that makes the model value equal the report-date share price.
Confirm through FY2029 if management-reported reservations convert into AWS growth above its medium-term test while spending intensity falls. Disconfirm if FY2027 adjusted diluted EPS falls below the dated forecast range’s lower bound.14
Confirm by FY2028 if the reservations reported by management in Q2 2026 become paid use and improve mix. Disconfirm if cloud growth or margins lag deployment, or investment does not ease.46
A result below that range would show weaker per-share earnings. Revenue, margin, capital spending and share growth would then need separate review.
Lower intensity frees cash.5
Shows per-share profit.1
Weakness drags sales.7
Issuance dilutes gains.6
| $469.82B |
| $513.98B |
| $574.79B |
| $637.96B |
| $716.92B |
| +11.1% |
| Gross profit | $197.48B | $225.15B | $270.05B | $311.67B | $360.51B | +16.2% |
| Operating income | $24.88B | $12.25B | $36.85B | $68.59B | $79.98B | +33.9% |
| Net income | $33.36B | $-2.72B | $30.43B | $59.25B | $77.67B | +23.5% |
| EPS (diluted) | $3.24 | $-0.27 | $2.90 | $5.53 | $7.17 | +22.0% |
| EBITDA | $59.31B | $54.17B | $85.52B | $123.82B | $165.34B | +29.2% |
| R&D | $56.05B | $73.21B | $85.62B | $88.54B | $108.52B | +18.0% |
| SG&A | $8.82B | $11.89B | $11.82B | $11.36B | $11.17B | +6.1% |
Free cash flow recovery requires deployed assets to generate more cash or capital intensity to decline.56
Capacity expansion is the priority. Reservations could support returns, but underuse would leave high depreciation and reinvestment against less revenue.
FY2025 operating income was $79.98 billion, but heavy capital spending means profit alone does not prove that returns on investment improved.
New investment must earn above the 9.3185% weighted funding cost dated 2026-09-08. The available operating figures do not establish whether it did.
FY2025 net income was $77.67 billion, operating cash flow was $139.51 billion and free cash flow was $7.70 billion.
Investment spending absorbed much of the cash generated by operations.
FY2025 stock compensation was $19.47 billion, while diluted average shares increased from 10.492 billion in FY2023 to 10.827 billion in FY2025.
Business growth must outpace share growth for investors to receive the full earnings benefit.
| Revenue | $716,924,000,000 |
|---|---|
| Cost of revenue | $356,414,000,000 |
| Gross profit | $360,510,000,000 |
| Operating expenses | $280,535,000,000 |
| Operating income | $79,975,000,000 |
| Non-operating items and tax | -$2,305,000,000 |
| Net income | $77,670,000,000 |
| Total assets | $818,042,000,000 |
|---|---|
| Cash | $86,810,000,000 |
| Current assets | $229,083,000,000 |
| Total liabilities | $406,977,000,000 |
| Current liabilities | $218,005,000,000 |
| Shareholders’ equity | $411,065,000,000 |
| Net income | $77,670,000,000 |
|---|---|
| Operating inflow | $162,893,000,000 |
| Depreciation and amortization | $65,756,000,000 |
| Stock-based compensation | $19,467,000,000 |
| Operating cash flow | $139,514,000,000 |
| Operating outflow | $23,379,000,000 |
| Cash available | $232,651,000,000 |
| Beginning cash | $82,312,000,000 |
| Financing inflow | $9,661,000,000 |
| Exchange-rate effect | $1,164,000,000 |
| Investing outflow | $142,545,000,000 |
| Capex | $131,819,000,000 |
| Other investing activities | $10,726,000,000 |
| Ending cash | $90,106,000,000 |
| Investing cash flow | -$142,545,000,000 |
| Financing cash flow | $9,661,000,000 |
Source: SEC EDGAR · Filed 2026-02-06 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| North America | $426.3B | 59.5% | 10% |
| International | $161.9B | 22.6% | 13.3% |
| Amazon Web Services | $128.7B | 18% | 19.7% |
Source: SEC EDGAR · Filed 2026-02-06 · SEC EDGAR
| Revenue by geography | Revenue | Share | YoY |
|---|---|---|---|
| United States | $489.7B | 68.3% | 11.8% |
| Non Us | $107.5B | 15% | 14.5% |
| Germany | $45.9B | 6.4% | 12.3% |
| United Kingdom | $43.2B | 6% | 14.2% |
| Japan | $30.7B | 4.3% | 12% |
Point-in-time financial data used in the 2026-09-08 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-12-31 | $136B | $12.3B | $2.4B | $17.2B | $10.5B | $6.7B | $8.1B | $3B | — | $0 | — | -$9.5B | -$3.7B | — | $19.9B | $26B | $8.8B | 3.1% | — | 7.2% | — |
| 2017-12-31 | $177.9B | $15.6B | $3B | $18.4B | $6.4B | $12B | $11.5B | $4.2B | — | $0 | — | -$27.1B | $9.9B | $19.9B | $21.9B | $31B | $24.9B | 2.3% | — | 7.1% | — |
| 2018-12-31 | $232.9B | $27.8B | $10.1B | $30.7B | $17.3B | $13.4B | $15.3B | $5.4B | — | — | — | -$12.4B | -$7.7B | $21.9B | $32.2B | $41.3B | $25B | 5.3% | — | 7.7% | — |
| 2019-12-31 | $280.5B | $37.4B | $11.6B | $38.5B | $21.7B | $16.9B | $21.8B | $6.9B | — | — | — | -$24.3B | -$10.1B | $32.2B | $36.4B | $55B | $24.8B | 5.2% | — | 6.6% | — |
| 2020-12-31 | $386.1B | $48.1B | $21.3B | $66.1B | $25.9B | $40.1B | $25.2B | $9.2B | $0 | — | — | -$59.6B | -$1.1B | $36.4B | $42.4B | $84.4B | $33.2B | 5.9% | — | 4.5% | — |
| 2021-12-31 | $469.8B | $59.3B | $33.4B | $46.3B | -$14.7B | $61.1B | $34.4B | $12.8B | $0 | — | — | -$58.2B | $6.3B | $42.4B | $36.5B | $96B | $50.6B | 5.3% | — | 5.0% | — |
| 2022-12-31 | $514B | $54.2B | -$2.7B | $46.8B | -$16.9B | $63.6B | $41.9B | $19.6B | $6B | — | $15.7B | -$37.6B | $9.7B | $36.5B | $54.3B | $70B | $70.5B | 2.4% | — | 7.8% | — |
| 2023-12-31 | $574.8B | $85.5B | $30.4B | $84.9B | $32.2B | $52.7B | $48.7B | $24B | $0 | — | -$15.9B | -$49.8B | -$15.9B | $54.3B | $73.9B | $86.8B | $67.2B | 6.4% | — | 8.1% | — |
| 2024-12-31 | $638B | $123.8B | $59.2B | $115.9B | $32.9B | $83B | $52.8B | $22B | $0 | — | -$11.8B | -$94.3B | -$11.8B | $73.9B | $82.3B | $101.2B | $58B | 10.8% | — | 8.9% | — |
| 2025-12-31 | $716.9B | $165.3B | $77.7B | $139.5B | $7.7B | $131.8B | $65.8B | $19.5B | — | — | $9.7B | -$142.5B | $9.7B | $82.3B | $90.1B | $123B | $68.8B | 11.2% | — | 9.9% | — |
Amazon.com Inc. (AMZN) trades at 24.2x forward earnings against a peer median of 27.8x. Its EV/EBITDA of 17.3x compares with a peer median of 30.1x. The comparison uses 4 peers: eBay Inc., DoorDash Inc., MercadoLibre, Inc. and Airbnb Inc., as of 2026-07-26 to 2026-09-08.
| Note |
|---|
| Cloud and artificial-intelligence infrastructure demand | positive | In Q2 2026, management linked proprietary compute to AWS attractiveness and reported reservations extending into FY2028. These remarks indicate demand visibility, not realized use or proven profitability. |
For FY2025, AWS was the clearest growth lever, while North America remained the revenue foundation.7
| Why |
|---|
| At the report-date price or above Fair value | Avoid initiating or increasing exposure while the report-date price remains above Fair value under the Sell rating. | The valuation already assumes meaningful growth and cash recovery that have not yet been demonstrated. |
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Limitation: Terminal value is 70.6% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
Multiply the peer median PEG by this stock's forecast growth to derive an implied forward P/E, then apply it to forward EPS.
Value each distinct segment, subtract corporate overhead and net debt, add probability-weighted optionality, and divide by diluted shares.
| 15.6% |
| 14.2% |
| 12.0% |
| 10.7% |
| 9.4% |
| 8.5% |
| 7.6% |
| 6.8% |
| 6.1% |
| 5.4% |
| Operating margin | 11.6% | 12.2% | 12.7% | 13.2% | 13.8% | 14.4% | 15.0% | 15.5% | 16.0% | 16.3% |
| Operating income | $96.03B | $114.89B | $134.23B | $155.33B | $177.11B | $200.32B | $224.01B | $247.78B | $271.07B | $292.15B |
| Tax rate | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% | 17.4% |
| NOPAT | $79.29B | $94.86B | $110.83B | $128.26B | $146.24B | $165.40B | $184.96B | $204.59B | $223.83B | $241.23B |
| Reinvestment | $67.30B | $66.17B | $60.55B | $50.67B | $35.66B | $39.90B | $44.14B | $48.29B | $52.25B | $55.68B |
| Reinvestment rate (of NOPAT) | 84.9% | 69.8% | 54.6% | 39.5% | 24.4% | 24.1% | 23.9% | 23.6% | 23.3% | 23.1% |
| Depreciation and amortization | $75.99B | $86.75B | $97.16B | $107.59B | $117.65B | $127.63B | $137.35B | $146.73B | $155.73B | $164.14B |
| Free cash flow to firm | $11.99B | $28.69B | $50.28B | $77.58B | $110.58B | $125.50B | $140.82B | $156.30B | $171.58B | $185.55B |
| North America revenue | $492.61B | $562.40B | $629.89B | $697.47B | $762.71B | $827.40B | $890.40B | $951.21B | $1.01T | $1.06T |
| International revenue | $187.07B | $213.57B | $239.20B | $264.86B | $289.64B | $314.20B | $338.13B | $361.22B | $383.38B | $404.08B |
| Amazon Web Services revenue | $148.79B | $169.87B | $190.26B | $210.67B | $230.38B | $249.92B | $268.95B | $287.32B | $304.94B | $321.41B |
| Terminal growth | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% |
| DoorDash Inc. |
| 26.0x |
| 5.8x |
| 62.5x |
| 8.9% |
| 3.9% |
| MELI | MercadoLibre, Inc. | 30.9x | 2.9x | 24.9x | 31.3% | 6.9% |
| ABNB | Airbnb Inc. | 29.6x | 8.3x | 35.4x | 34.5% | 21.0% |
