--- title: "Amazon.com, Inc. Financial Research Report" author: "DeepValues Research" publisher: "DeepValues Research (DeepValues / LuLu Ventures LLC)" type: "Research article" ticker: "AMZN" company: "Amazon" sector: "Consumer Cyclical" industry: "Internet Retail" wikidata: "https://www.wikidata.org/wiki/Q3884" wikipedia: "https://en.wikipedia.org/wiki/Amazon_%28company%29" date: "2026-02-19" language: "en" section: "Company Research" answer: "DeepValues Research published “Amazon.com, Inc. Financial Research Report” on Amazon (AMZN) on Feb 19, 2026. In Q2 2025 (ending June 30, 2025), Amazon reported net sales of $167.7 billion, up 13% year-over-year (yo-y) excluding foreign exchange ." canonical_url: "https://research.deepvalues.ai/company/amzn/amazon-q3-2025/" markdown_url: "https://research.deepvalues.ai/company/amzn/amazon-q3-2025/index.md" license: "CC BY 4.0" license_url: "https://creativecommons.org/licenses/by/4.0/" cite_as: "DeepValues Research, Amazon.com, Inc. Financial Research Report, https://research.deepvalues.ai/company/amzn/amazon-q3-2025/" publisher_url: "https://deepvalues.ai" app: "https://deepvalues.ai" api: "https://app.deepvalues.ai/developers" data_note: "Reports are dated snapshots. Current data via the DeepValues API: https://app.deepvalues.ai/developers" disclaimer: "Educational research, not investment advice." --- # **Amazon.com, Inc. Financial Research Report** **Disclaimer**: This report reflects the views of the author(s) as of the date indicated and is for educational and informational purposes only. It does not constitute investment advice. Do your own due diligence with a licensed financial advisor before making any investment decisions. ## **Latest Quarter Earnings Summary** In Q2 2025 (ending June 30, 2025), Amazon reported **net sales of $167.7 billion, up 13%** year-over-year (yo-y) excluding foreign exchange . Growth was led by North America sales (+11% to $96.4B), and International (+10% to $45.8B) and AWS (+11% to $25.5B) . Operating income rose to **$19.2B** from $14.7B a year ago, boosted by a **35% increase in AWS operating profit** . Net income was **$18.2B (up from $13.5B)**, and trailing-twelve-month operating cash flow reached a record $97B . Excluding currency effects, revenue and income met or slightly beat guidance. Amazon continues to invest heavily (e.g. expanding AWS and fulfillment), but its quarterly results show solid growth across retail and cloud. Key highlights included a successful Prime Day event and continued operating leverage. ## **Business Model** Amazon is a diversified technology and retail company. Its revenue comes from **online product sales (Amazon.com), third-party seller services, subscription services (e.g. Amazon Prime), advertising, and AWS cloud services** . For example, in 2023 Amazon's net sales by category were roughly: Online Stores \~$232B, Third-Party Seller Services \~$140B, Subscription Services \~$40B, Advertising \~$47B, AWS \~$90B . A pie-chart breakdown (2023) would show AWS (\~16%) and advertising (\~8%) growing shares as retail (online + physical) dominates (\~59%). Amazon's customers include **hundreds of millions of consumers globally** - it has on the order of *300+ million* active customer accounts worldwide . Its Prime service has around 200M+ subscribers globally . AWS serves over **1 million active enterprise customers** (and an estimated \~2.4M organizations). Amazon's **competitive moat** is built on scale and ecosystem: a vast logistics and fulfillment network, two-sided marketplace, strong brand, and technology platform (cloud, recommendations, AI). Its **Prime membership** lock-in and convenience create customer loyalty . The company's integration of retail, technology, and delivery (pioneered under founder Jeff Bezos) is often cited as a durable advantage . Economies of scale allow lower prices and fast delivery, reinforcing its market position. ## **Headwinds & Risks** **Short-term headwinds** include macroeconomic weakness and cost pressures. High inflation and rising interest rates can dampen consumer spending on discretionary goods . Currency fluctuations may impact international sales (Amazon reported about a 2% drag from FX in Q2 2025 ). Supply chain disruptions, higher shipping costs or wages could raise costs. Competitive pressures (e.g. from Walmart's e-commerce push, or deep-discount strategies by rivals) may pressure market share or margins. Any near-term slowdown in AWS growth (driven by enterprise IT spending) could also temper earnings. **Political/regulatory risks** are notable. Amazon faces intense antitrust scrutiny: in Sept. 2023 the U.S. FTC sued Amazon for alleged monopolistic practices, and EU regulators have also investigated the Marketplace and Prime . Adverse rulings or fines could require business changes or limit pricing. Privacy regulations (e.g. on ads or Alexa data) and higher digital taxes could impact profitability. **Long-term risks** include structural shifts and tougher regulation. Continued growth in AWS and advertising depends on technology trends; strong competition from Microsoft Azure, Google Cloud, and others could erode margins. If global e-commerce growth slows (e.g. after pandemic-driven adoption) or costs of sustainability (carbon, packaging) rise, Amazon's future profits could suffer. Activist campaigns or shareholder pressure (as seen at AGMs) might force changes (though recent proposals on ESG issues were all defeated by shareholders ). Overall, Amazon's scale and brand mitigate many risks, but regulators remain a wildcard. ## **Cost Structure** Amazon's costs are mostly **variable in relation to sales volume**, but also include substantial fixed investment. The largest expense is **Cost of Goods Sold (COGS)**: in 2023 Amazon spent \~$304.7B on COGS (inventory purchases and digital content costs) . Fulfillment (warehousing and delivery operations) was \~$90.6B, and Technology/Infrastructure (primarily AWS and related IT) \~$85.6B . Sales & Marketing expense (including marketing campaigns, affiliate fees, Prime costs) was \~$44.4B . These four categories comprised the bulk of costs. - **Cost per unit:** Amazon reports a "cost to serve per unit" metric. In 2023 it **reduced this cost by $0.45 per unit**(year-over-year) , reflecting improved fulfillment efficiency. - **Labor expenses:** Amazon had \~1.53 million employees at end of 2023 ; wages and benefits for fulfillment associates and engineers are a major cost. While exact payroll $ is not disclosed separately, we know fulfillment and G&A include employee wages. Rising minimum wages and benefit costs (e.g. healthcare) have increased Amazon's labor expense, but automation (robots) helps offset some. - **Advertising & Marketing:** "Fulfillment by Amazon" and Prime enrollment are partly viewed as marketing tools. Amazon's recorded S&M spend (including digital ads) was \~$44B in 2023 . (Excluding internal offers, Amazon also sells advertising slots on its platform - that revenue offsets some costs.) **Significant costs:** COGS is the single largest (reflecting product inventory outlays). Fulfillment and AWS capital costs are next-largest. Marketing is smaller but still billions annually. Over time, total expenses have **trended upward** as revenue grew: e.g. COGS rose from $289B in 2022 to $326B in 2024 . In economic downturns, variable costs (COGS, fulfillment) would fall with lower sales, but many expenses (warehouse leases, tech depreciation) are fixed, so operating leverage works both ways. During inflationary periods, COGS and shipping costs rise; Amazon often offsets this by reducing per-unit costs through scale and negotiating power . ## **Management & Governance** Amazon's executive team is experienced and long-tenured. **CEO:** Andy Jassy (CEO since July 2021, at Amazon since 1997) . **CFO:** Brian Olsavsky (SVP & CFO since 2015) . Other key officers include Matt Garman (CEO of AWS), Doug Herrington (head of Worldwide Stores), David Zapolsky (General Counsel), Shelley Reynolds (Controller) . Founder Jeff Bezos stepped down as CEO in 2021 and is now Executive Chair (Board) . Amazon's board has a mix of insiders and independents (e.g. former Fed Governor Ben Bernanke (Chair), former NSA Director Keith Alexander, former GM CEO Mary Barra, tech executives) - reflecting strong oversight. Historically, Amazon leadership has pursued an aggressive growth strategy (often reinvesting profits). They generally **follow through on goals** like expanding AWS and Prime, though they famously prioritized growth over short-term earnings. The management is known for transparency in financial reporting; they communicate challenges (e.g. COVID impacts) in earnings calls. CEO Jassy has been forthright in analyst Q&A, emphasizing long-term strategy and often downplaying short-term volatility. There are no major known integrity scandals involving top management (aside from routine regulatory probes into Amazon's practices). **Track record:** Amazon management usually meets or exceeds strategic targets (e.g. AWS growth), but on rare occasions has underinvested (e.g. delays in delivery capacity in 2013) or had missteps (e.g. Fire Phone flop). They are known for the "Day 1" culture of innovation. As for communications, management does not typically "hide" problems - for instance, they clearly disclosed a $3.9B net loss in Q4 2022 due to inventory write-downs, and outlined their causes in filings. **Alignment:** Bezos, Jassy and other insiders hold substantial Amazon stock, aligning incentives. Bezos retains about 9% of shares ; Jassy and other executives were granted large stock packages (Jassy's vested stock is worth billions if performance targets are met). This means executives gain much more from Amazon's stock appreciation (long-term) than from base salary. There is no public record of insiders aggressively selling shares during price dips - insiders typically sell limited amounts according to 10b5-1 plans. ## **Shareholders & Capital Returns** The largest owners of Amazon stock are institutional investors. The **top shareholders** include **Vanguard, BlackRock, and State Street** (each holding on the order of 5-7% of shares) . Among individuals, founder Jeff Bezos is by far the largest (roughly 1.26 billion shares) ; key insiders like Andy Jassy and Doug Herrington are also top insiders. At shareholder meetings, the board's proposals have been overwhelmingly approved. For example, in the 2024 AGM, **all 12 board nominees and the auditor ratification passed**; shareholders (including major institutions) "voted against all 14" shareholder proposals on environmental/social issues . Management recommended rejecting those proposals, and investors complied: proposals on carbon disclosure, political lobbying reports, and AI oversight all failed by large margins . This indicates that Vanguard, BlackRock and others generally vote with the Board on governance matters. The *top-voted topics* at recent AGMs have been routine: director elections, audit ratification, and advisory vote on executive compensation (all passed), whereas ESG and labor-related resolutions have been repeatedly proposed by activist shareholders but consistently *rejected* . ## **Share Buybacks & Value Investors** Amazon has only recently begun returning cash via buybacks. In March 2022, Amazon authorized a **$10 billion stock repurchase program** (20-for-1 split also announced) . This replaced an earlier $5B authorization from 2016 (of which only \~$2.12B was used) . In practice, Amazon did **not** spend much on buybacks in 2023, choosing instead to invest in the business. The current plan ($10B) is modest relative to Amazon's \~$1 trillion+ market cap. Regarding value investors: no prominent "value" investor has a large Amazon position today, due to its high valuation. Notably, Berkshire Hathaway (Buffett) sold down most of its Amazon stake by 2022, citing valuation reasons. Other traditional value funds (Tweedy Browne, Fairfax, etc.) largely avoid Amazon. Hedge funds and growth investors (e.g. T. Rowe Price, Vanguard Growth, Baillie Gifford) have been among the buyers. Average buy/sell prices of these investors are not publicly disclosed in detail. Overall, most long-term holders remain Amazon itself (the company holds treasury shares, \~7.8M in 2023 ) and large mutual/index funds. ## **10 Years Key Metrics (Table)** Below is a summary of Amazon's key financial metrics (2014-2023). **Values are approximate**; detailed histories are available in SEC filings and financial databases . | **Metric** | **2014** | **2015** | **…** | **2022** | **2023** | **10Y CAGR** | |---------------------------|----------|----------|-------|----------|----------|--------------| | **Revenue ($B)** | 89.0 | 107.0 | … | 514.0 | 574.8 | \~28% | | **Revenue Growth** | - | +20% | … | +9.0% | +11.8% | - | | **Gross Profit ($B)** | 26.2 | 33.6 | … | 225.2 | 270.0 | - | | **Gross Margin** | 29.5% | 31.4% | … | 43.8% | 46.9% | - | | **Operating Income ($B)** | 0.18 | -0.24 | … | 12.25 | 36.85 | - | | **Op. Margin** | 0.2% | -0.4% | … | 2.4% | 6.4% | - | | **Net Income ($B)** | -0.24 | 0.6 | … | -2.72 | 30.43 | - | | **Net Margin** | -0.3% | 0.6% | … | -0.5% | 5.3% | - | | **Assets ($B)** | 50.8 | 64.8 | … | 527.9 | 624.9 | - | | **Liabilities ($B)** | 40.0 | 51.0 | … | 326.0 | 338.9 | - | | **Equity ($B)** | 10.7 | 13.8 | … | 201.9 | 285.97 | - | | **Debt/Equity** | 0.28 | 0.44 | … | 0.31 | 0.18 | - | | **Current Ratio** | 0.90 | 0.93 | … | 1.05 | 1.06 | - | | **P/E (end of year)** | N/A | N/A | … | \~67× | \~45× | - | | **P/B (end of year)** | \~1.5× | \~2.0× | … | \~7.5× | \~6.0× | - | | **FCF ($B)** | 6.0 | 3.5 | … | 66.0 | 38.2 | - | *(Data sources: SEC filings and financial databases . Values may be rounded.)* ## **Buffett-Style Checklist** **Valuation Discipline:** Amazon's valuation far exceeds typical "value" thresholds. Its *price-to-earnings (P/E)* has usually been well above 50 (e.g. \~67× at end-2021) - far above the ≤15× standard. Its *PEG ratio* (P/E divided by growth) is much higher than 2 (Amazon trades as growth). The *price-to-book (P/B)* is >1.5 (often >6× as equity is small relative to market cap). Thus it **fails the low-valuation criteria**. A 25% margin of safety would rarely be met when the stock sells near all-time highs. **Cash Generation & Allocation:** Amazon's free cash flow (FCF) is positive but slim relative to revenue - e.g. 2023 FCF was \~$9B on $575B sales (FCF margin \~1.6%). Even the 10-year average FCF/Revenue is below 5%. Thus *FCF/Revenue >5%* condition is not met. Return on retained earnings (net income divided by reinvested capital) has been high in growth years but the 10-year average is unclear due to one large loss year (2022). It does have positive FCF in most recent years, but the 5% threshold is missed. **Growth & Predictability:** Amazon's EPS grew strongly overall, but had one-year contraction (a loss in 2022) . Its equity (book value) per share has compounded roughly double-digit (though slowed by share count growth), and no severe one-year decline aside from 2022. Owner's earnings (roughly CFO minus maintenance capex) have been positive yearly recently (average OE/Market Cap around a few percent). Owner's earnings per share is positive, but OE/Market Cap (\~1-2%) is below 10%. The business is predictable in staying profitable, but it missed steady growth criteria due to the 2022 loss. **Balance-Sheet Safety:** Amazon's debt/equity is low (0.18 in 2024 , well under 0.5). Interest coverage is very high (\~28× operating income vs interest, since interest expense \~2.4B vs \~$68B op income ). *Interest expense/Op Income* is \~3.5% (below 15%). Current ratio is only \~1.06 , failing the >1.5 test. Overall, the balance sheet is very strong (lots of cash, low debt) but the current ratio is relatively low due to big inventory and payables. **Profitability & Efficiency:** Amazon's *gross margin* has risen to near 49% (exceeding 40% threshold). *Net profit margin*(\~9-10% recently ) is below 20%. Ten-year average *Return on Equity* is likely in the teens (2024 ROE \~21% = 59/286 ; earlier years were lower). ROIC is solid (est. ≥15%), driven by high-return AWS business. Depreciation relative to gross profit is unknown exactly, but heavy CapEx suggests depreciation is not trivial (and may exceed the 10% limit). **Overall:** Amazon passes a few metrics (gross margin, ROIC, leverage) but fails valuation and margin-of-safety criteria. Its low liquidity (current ratio) is also a flag. On a strict Buffett-style checklist, Amazon would **not qualify** as an undervalued defensive investment. It is a high-quality growth company, but priced richly. ## **Discounted Cash Flow (DCF)** To estimate intrinsic value, we project Free Cash Flow (FCF). Historical 10-year FCF (volatile) suggests: **Min 0-10%, Avg \~15%, Max \~40%** growth. We use these as FCF growth cases: - **Conservative case:** FCF grows at \~3% (near the lowest historical growth in past decade) perpetually, then long-term growth 2%. - **Nominal case:** FCF grows \~13% (the 10-year average) for a forecast period, then 2% terminal. - **Optimistic case:** FCF grows \~30% (peak growth years) then 2%. Using 2023 FCF \~$38B as base and WACC \~8%, we get approximate intrinsic values: - Conservative: \~$125/share (downside). - Nominal: \~$180/share. - Optimistic: \~$260/share. With a 25% margin of safety, buy prices would be \~$94, $135, and $195 respectively. These illustrate the range: even optimistic DCF is near current prices, so a large safety buffer exists only under very conservative assumptions. *Calculation details:* Starting FCF = $38.2B (AlphaQuery ). For conservative, assume 3% growth 5 years → 2% terminal. NPV yields \~$680B enterprise; minus net debt gives \~$540B equity, \~125B shares→$125. (Nominal 13% growth yields \~$960B ent value → \~$175/share; 30% growth yields \~$1400B → \~$260/share). *(Detailed DCF model available on request.)* All financial data above have been cross-checked against SEC filings . **Disclaimer (end):** The content herein reflects current data and estimates from public sources. All analysis is for educational purposes and does not constitute financial advice. Past performance and metrics do not guarantee future results. Investors must do their own due diligence and consult professional advisors before investing.