Amazon
Thesis
- The business: a first-party retailer, a third-party marketplace with an advertising network attached, and the largest public cloud infrastructure provider.
- Moat:
- Retail: scale and two-sided network, logistics network.
- Cloud: scale, powered data center capacity, contracted demand.
- Infrastructure: scale & heavy capital investment, cost leadership.
- Earnings drivers: cloud delivery, advertising, unit fulfillment cost.
- Economics:
- Data center CapEx: 3-year breakeven, 5-6 years of useful life for servers.
- Third-party marketplace (60% of retail): ~50% take rate on GMV (referral commission, fulfillment fee, storage, advertising).
- Growth drivers:
- AWS capacity conversion.
- Retail unit volume growth ~0.55% of US retail share a year.
- Third-party seller services: take rate expansion on advertising; third-party mix peaked.
- Advertising: On-site ad load is near its peak. Growth now comes from new services, Prime Video, Live Sport, offsite inventory.
- Prime: a pricing lever that has not been tested.
- Management incentive: no performance linked equity.
- Risks:
- Amazon is simultaneously a supplier, equity holder, and lender to OpenAI and Anthropic.
- Depreciation converges on capex while utilization slows -> margin compression.
- What to watch: depreciation, backlog & counterparty mix, FTC trial March 2027.
