Amazon.com, Inc

Analyst thesis

Our recommendation is based on:

• The company is structurally shifting from lower margin ecommerce towards high margin, cash-generating web services through AWS, which accounts for 18% of net sales and 57% of operating profit. AWS’s revenue contribution has increased from 13% to 18% over the past five years.

• AMZN continues to generate strong cash flow in an environment with a drag on cash due to high capex needs. Operating cash flows rose 20% over this period and we anticipate similar growth in FY26 driven by robust AWS performance.

• Demand for artificial intelligence (AI) infrastructure platforms serve as a catalyst for long-term growth in cloud and AI services.

  Various competitive advantages across business segments, including scale, cost leadership and network effects in cloud and logistics, alongside differentiation through quick delivery and exclusive access to resources such as distribution networks and vast customer data.

• Key growth drivers going forward include:

  o Continued global cloud adoption accelerated by AI.

  o Margin expansion through higher AWS and advertising growth combined with fulfilment network efficiencies and automation.

  o Ongoing logistics expansion.

  o Long-term growth projects, including an $8 billion stake in Anthropic, Kuiper, Zoox and freight services.

• Attractive valuation levels from a P:E perspective compared to its own history.