Technology / Retail
E-commerce and cloud infrastructure company with expanding AI and logistics capabilities.
View forensic reportFrom 5.3% to 11.2% operating margin in four years. Now the company is spending $131.8 billion in a single year. This is either the best capital allocation decision in tech history or a very expensive bet on demand that may not materialise.
Operating income has grown sixfold since 2022. The market still thinks it is buying a retailer.
The market still prices Amazon as a retailer. The financials say otherwise.
Andy Jassy's shareholder letter explicitly embraces ROIC and capital efficiency for the first time. With operating margins at 10.5% and $77.7B in net income, the margin story we flagged is accelerating.
Operating margins hit 11.2% in 2025, up from 2.4% in 2022. Now Amazon is spending more on infrastructure than any company in history. That tension defines the investment case.
Operating margins have expanded from 2.4% to 11.2% in three years. The multiple has not caught up.
Free cash flow fell 77% in 2025. That is not what you think it means.
The most significant structural change in Amazon's business is not in the headlines. It is in the gross margin line.
Amazon generated $139.5 billion from operations in 2025. It spent $131.8 billion on capital expenditures. The resulting $7.7 billion in free cash flow is not a problem, but it is a warning that requires context.
AWS, advertising, and fulfillment are not three separate businesses. They are three interlocking moats that make Amazon's overall position stronger than any individual piece suggests.
Amazon trades at 27x earnings and 3x revenue. Whether that is expensive or cheap depends entirely on which business you think you are buying.