Amazon: The Logistics & Cloud Operating System

Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). Its products offered through its stores include merchandise and content purchased for resale; and products offered by third-party sellers The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, Blink, eero, and Echo; and develops and produces media content. In addition, it offers programs that enable sellers to sell their products in its stores; and programs that allow authors, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, the company provides compute, storage, database, analytics, machine learning, and other services, as well as fulfillment, advertising, and digital content subscriptions. Additionally, it offers Amazon Prime, a membership program. The company serves consumers, sellers, developers, enterprises, content creators, and advertisers. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.

👑 Executive Summary

Amazon.com (AMZN) is two monopolies in a trench coat: the dominant e-commerce logistics network and the world's largest cloud provider (AWS). The "Amazon Flywheel" is the most potent business model in modern history: AWS's healthy margins fund the relentless expansion of the retail empire, which in turn generates data to feed the cloud.

[!IMPORTANT] Investment View: High Conviction. The convergence of Generative AI (AWS Bedrock) and Logistics Regionalization is driving a new era of operating margin expansion.

1. AWS: The Cash Engine

Amazon Web Services (AWS) pioneered cloud computing and remains the leader with ~$100B in revenue run-rate.

The AI Layer: While Microsoft moved first with OpenAI, AWS has countered with "Bedrock" (model choice) and custom silicon (Trainium/Inferentia).
Infrastructure Lead: AWS has more data centers in more regions than any competitor. For enterprises wanting to move workloads to the cloud, AWS is the "safe," default choice.
Margin Expansion: As growth stabilizes, AWS is focusing on efficiency, extending server lifespans, and optimizing costs, driving operating income higher.

The Silicon Advantage

Unlike Azure, which relies heavily on Nvidia, Amazon has been building its own chips for years. Trainium and Inferentia offer better price-performance for specific workloads, creating a margin moat as AI scales.

2. Retail & Advertising

The "Everything Store" has evolved into a high-margin advertising giant.

Advertising: Amazon is now the third-largest digital ad platform (behind Google and Meta). Ads on Amazon are high-intent (people are there to buy), commanding high premiums. This is pure profit margin.

Amazon: The Logistics & Cloud Operating System

👑 Executive Summary

1. AWS: The Cash Engine

The Silicon Advantage

2. Retail & Advertising

3. The Efficiency Turn

Regionalization

Headcount

⚠️ Risks to the Thesis

Conclusion

AMZN Valuation Model

Investment Memo: AMZN

Amazon.com, Inc. (AMZN)

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Investment Memo: AMZN

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