Amazon.com, Inc.
Consumer Discretionary · Broadline Retail
Hyperscale-compute earnings engine wrapped in a retail/ads cash machine. AWS is the structural alpha; retail + ads fund the capex without diluting.
- AWS run-rate ~$115B, growing ~19% YoY with operating margin ~38% - single largest contributor to consolidated op income (~70%).
- $8B Anthropic stake routes Claude training + inference onto AWS Trainium2; multi-year capacity commitment de-risks the chip ramp.
- Trainium2 / Inferentia2 = only merchant accelerator at hyperscale outside $NVDA; reduces $NVDA cost per token for AWS-native workloads.
- Ad business ~$55B run-rate growing ~20%, ~$40B+ incremental margin - fully funds AWS capex without equity raise.
- 2026 capex guide ~$105B routed almost entirely to AI data centers; 1.3GW Indiana campus + Mississippi expansions.
- $MSFT Azure + OpenAI growing faster (~30% YoY) - share-of-AI-workloads narrative not yet won.
- Trainium adoption outside Anthropic is thin; CUDA moat keeps $NVDA at ~90% of training spend.
- Retail op margin still ~5% - any consumer slowdown compresses the segment funding capex.
- Capex-to-FCF ratio elevated; FCF conversion has degraded from 2023 peak as AI buildout dominates.
- Antitrust overhang (FTC case ongoing) + EU DMA gatekeeper obligations are non-zero structural drags.
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