As at 12 March 2026

Executive Summary

Key highlights

In this report, we review AMZN’s FY25 results, released in February 2026.

Financial results at a glance:

• Net sales rose 12% for the full year and 14% in 4Q25.

  • North American sales increased 10% for FY25 and 10% in 4Q25.

  • International sales growth was 13% for the full year and 17% in 4Q25.

  • AWS sales climbed 20% for the full year and 24% in 4Q25.

• Operating income grew 17% for the fiscal year and 18% in 4Q25.

  • North American operating income advanced 18% for FY25 and 24% in 4Q25.

  • International operating income increased 24% for the full year and declined 23% in 4Q25.

  • AWS operating income was up 15% for the full year and 18% in 4Q25.

• AWS represents 18% of group net sales and accounts for 57% of operating income, underscoring the strength of its web-based services. While its fixed infrastructure costs are higher, variable costs are lower, indicating a structurally high-margin business at scale compared to the core business – that is capital and logistics intensive with lower margins.

• Gross profit margins expanded by 143bps and 113bps, respectively for FY25 and 4Q25.

• Operating income margin expanded 41bps and 40bps, respectively for FY25 and 4Q25.

• Net income advanced 31% for the full year and 6% for 4Q25. DEPS were up 30% for the full year and 5% in 4Q25.

• The group had its operating cash flows grow by 20% and increased capital expenditure by 59% compared to FY24.

• Our take on the results:

  • Strong growth from the structurally higher margin business remains a key driver.

  • Capital intensity in the cloud and AI space is a growing concern in an otherwise historically less capital-intensive sector.

  • Demand for cloud services continues, while e-commerce continues to grow, sustaining the core business. AI expansion will serve as an additional driver, rather than the sole catalyst, going forward.

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:

  • Continued global cloud adoption accelerated by AI.

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

  • Ongoing logistics expansion.

  • 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.