AmazonWide moat

AMZN — overall economic moat

Investment snapshot
Wide moat↗ WideningConfidenceHighValuationFair
Strongest advantageMarketplace + fulfillment flywheel
Greatest threatRegulation & AWS competition
Key metricROIC vs WACC
Verdict: A wide moat whose margin transformation the P/S lens misses — AWS carries the profit while the retail flywheel gets harder to copy.
📈 AMZN valuation, revenue & earnings — P/E, P/S, revenue, EPS →

Amazon is two companies wearing one ticker. The first is the store: $588 billion of sales in 2025 across the North America and International segments, made up of its own online shelves ($269 billion), the commissions and fulfilment fees it charges third-party sellers ($172 billion), an advertising business renting the best spots on the shelf ($69 billion), Prime and other subscriptions ($50 billion) and physical stores, chiefly Whole Foods ($23 billion)1. The second is AWS, the cloud: $128.7 billion of revenue, 18% of the company, which earned $45.6 billion of the $80.0 billion of operating income2, or 57%3. The store wins the customers; the cloud earns most of the money.

Share of Amazon's 2025 net sales and operating income (%)Share of net salesShare of operating incomeNorth America59.5%37.0%International22.6%5.9%AWS18.0%57.0%Calc from the Form 10-K FY2025 segment table: $716.9B of sales, $80.0B of operating income
AWS is under a fifth of the sales and well over half of the operating income; the two store segments are the reverse.

The store's own economics are a study in toll collection. Selling goods at retail is thin work, and Amazon long ago stopped relying on it alone: the profitable lines are the ones where other people do the selling (a seller pays a commission, then fulfilment, then advertising, until something like half of a typical merchant's revenue passes through Amazon's till4) and where tens of millions of households prepay for Prime and then shop to justify it. Even so, the two retail segments together earned $34.4 billion on $588 billion of sales in 2025, a margin under 6%5.

AWS is the same idea at higher altitude: build the warehouse once, data centres instead of fulfilment centres, and rent it by the hour. In the second quarter of 2026 it grew 37% to $42.2 billion, its fastest growth in eighteen quarters, at a 39.4% operating margin6, and customers had signed up for $496 billion of future spending it had not yet recognised7. Over the twelve months to June the whole company sold $775.7 billion and earned $93.7 billion of operating income8; AWS supplied 58% of it9.

Whether all this defends itself — the Prime habit, the fulfillment machine no rival can economically copy, the AWS franchise, the marketplace flywheel — is the moat question, taken up wheel by wheel in The Moat below; how each of the three segments earns and grows is set out in The Revenue Lines. The forces that could jam it live in the threats; the market's blind spots in the insights; and the next machines being built ahead of demand — satellites, robotaxis, the rebooted assistant, the Anthropic wager — under Future Bets.

The number that tests this moat
Reported
Revenue, and where it comes from
$200.6B in Q2 2026, +20%; AWS $42.2B of it (21%)

AWS is a fifth of revenue and earned 60% of operating income in the first half of 2026. The store's lines grow 12-16% a year; AWS grew 37% in the quarter. A quarter in which AWS growth fell back below 20% would say the AI build is not converting into revenue.

Source: Amazon Q2 2026 earnings release (Form 8-K, Exhibit 99.1) ↗
Moat scorecardHow ratings work →
Switching costs7/10
Network effects9/10
Pricing power6/10
Hard to replicate8/10
Disruption resistance6/10
Overall durability8/10

The marketplace flywheel and fulfillment scale are hard to copy; retail margins stay thin while AWS carries the profit.

Dig deeper
DIG DEEPER 01
The Revenue Lines
Three segments with the profit in reverse order to the sales: AWS earned two-thirds of eleven years' operating income, and International lost money…
DIG DEEPER 02
The Moat
Amazon spent thirty years being valued as a thin-margin retailer while quietly building three fat-margin engines — the cloud, the ad machine, and the…
DIG DEEPER 03
Competitors
Amazon is four companies wearing one ticker, so no single rival fights it on the same ground twice — Walmart pressures retail without touching AWS…
DIG DEEPER 04
Major Clients
Amazon has arranged to be paid by every party in its own ecosystem: the shopper pays a membership, the seller pays a commission, and then the same…
✦ Future bets — beyond today's moat
✦ FUTURE BET 01
The Future Bets
Amazon's future bets are the AWS playbook re-run — build the expensive machine first, in orbit, on the street, in the kitchen, and under the model…
⚠ Threats to the moat
⚠ THREAT 01
Antitrust & Regulation
The FTC's case aims at the marketplace's most profitable habits — the self-preferencing and seller fees that fund the flywheel.
⚠ THREAT 02
Cloud Competition
AWS's lead is real and its rivals are two of the richest companies on earth — first place is re-earned every quarter.
◆ What the market may be missing
◆ THE VARIANT VIEW
What the Market Isn't Pricing In
The market still prices Amazon on retail's thin margins while operating income went from $12B to $80B in three years — the P/S lens misses the margin…
◆ THE VARIANT VIEW
Inside the Latest Quarter (Q2 2026)
AWS grew 37% at a 39% margin, but $53 billion of Anthropic gains made up most of net income and free cash flow turned negative.
References
  1. ReportedThe first is the store: $588 billion of sales in 2025 across the North America and International segments, made up of its own online shelves ($269 billion), the commissions and fulfilment fees it charges third-party sellers ($172 billion), an advertising business renting the best spots on the shelf ($69 billion), Prime and other subscriptions ($50 billion) and physical stores, chiefly Whole Foods ($23 billion).
    Amazon.com Inc., Form 10-K, FY2025 — segment results (net sales North America $426,305M, International $161,894M, AWS $128,725M; operating income $29,619M, $4,750M and $45,606M of a consolidated $79,975M, against $24,967M, $3,792M and $39,834M of $68,593M in 2024), net sales by product line (online stores $269,287M, physical stores $22,561M, third-party seller services $172,162M, advertising services $68,635M, subscription services $49,619M, AWS $128,725M, other $5,935M), net income $77,670M, and 2025 charges of $2.5 billion recorded in Q3 2025 primarily related to the settlement of a lawsuit with the Federal Trade Commission — Fiscal year ended December 31, 2025 · publ. February 2026 · source ↗
  2. ReportedThe second is AWS, the cloud: $128.7 billion of revenue, 18% of the company, which earned $45.6 billion of the $80.0 billion of operating income, or 57%.
    Amazon.com Inc., Form 10-K, FY2025 — segment results (net sales North America $426,305M, International $161,894M, AWS $128,725M; operating income $29,619M, $4,750M and $45,606M of a consolidated $79,975M, against $24,967M, $3,792M and $39,834M of $68,593M in 2024), net sales by product line (online stores $269,287M, physical stores $22,561M, third-party seller services $172,162M, advertising services $68,635M, subscription services $49,619M, AWS $128,725M, other $5,935M), net income $77,670M, and 2025 charges of $2.5 billion recorded in Q3 2025 primarily related to the settlement of a lawsuit with the Federal Trade Commission — Fiscal year ended December 31, 2025 · publ. February 2026 · source ↗
  3. Moat Explorer calcThe second is AWS, the cloud: $128.7 billion of revenue, 18% of the company, which earned $45.6 billion of the $80.0 billion of operating income, or 57%.
    Moat Explorer calculation from Amazon's Form 10-K segment and product-line tables (FY2022-FY2025) and the quarterly results releases: AWS share of operating income = AWS operating income / consolidated operating income ($45,606M / $79,975M = 57.0% in 2025; ($14,161M + $16,621M) / ($23,852M + $27,461M) = 60.0% in H1 2026; $16,621M / $27,461M = 60.5% in Q2 2026; $54,681M / $93,712M = 58.3% TTM); AWS share of net sales $128,725M / $716,924M = 18.0%; retail segments' operating income $29,619M + $4,750M = $34,369M on $588,199M = 5.8%; 2022 segment operating income North America -$2,847M, International -$7,746M, AWS $22,841M against a consolidated $12,248M; North America operating margin -$2,847M / $315,880M = -0.9% in 2022; advertising TTM to June 2026 $17,703M + $21,317M + $17,243M + $19,809M = $76,072M — FY2022-Q2 2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Amazon's filed segment, product-line and supplemental tables; see the source line for each operand.
  4. Third-party estimateSelling goods at retail is thin work, and Amazon long ago stopped relying on it alone: the profitable lines are the ones where other people do the selling (a seller pays a commission, then fulfilment, then advertising, until something like half of a typical merchant's revenue passes through Amazon's till) and where tens of millions of households prepay for Prime and then shop to justify it.
    Marketplace Pulse / ILSR analyses — cumulative seller take (referral + FBA + advertising) approaching ~50% of a typical seller's revenue — Recent analyses · publ. 2023-2026 · source ↗
  5. Moat Explorer calcEven so, the two retail segments together earned $34.4 billion on $588 billion of sales in 2025, a margin under 6%.
    Moat Explorer calculation from Amazon's Form 10-K segment and product-line tables (FY2022-FY2025) and the quarterly results releases: AWS share of operating income = AWS operating income / consolidated operating income ($45,606M / $79,975M = 57.0% in 2025; ($14,161M + $16,621M) / ($23,852M + $27,461M) = 60.0% in H1 2026; $16,621M / $27,461M = 60.5% in Q2 2026; $54,681M / $93,712M = 58.3% TTM); AWS share of net sales $128,725M / $716,924M = 18.0%; retail segments' operating income $29,619M + $4,750M = $34,369M on $588,199M = 5.8%; 2022 segment operating income North America -$2,847M, International -$7,746M, AWS $22,841M against a consolidated $12,248M; North America operating margin -$2,847M / $315,880M = -0.9% in 2022; advertising TTM to June 2026 $17,703M + $21,317M + $17,243M + $19,809M = $76,072M — FY2022-Q2 2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Amazon's filed segment, product-line and supplemental tables; see the source line for each operand.
  6. ReportedIn the second quarter of 2026 it grew 37% to $42.2 billion, its fastest growth in eighteen quarters, at a 39.4% operating margin, and customers had signed up for $496 billion of future spending it had not yet recognised.
    Amazon.com, second-quarter 2026 results release (Form 8-K, Exhibit 99.1) — net sales $200.6B (+20%), operating income $27.5B (13.7% margin), AWS sales $42.2B (+37%, fastest growth in 18 quarters, $169B annualized run rate) and operating income $16.6B (39.4% margin, against 32.9% a year earlier), advertising $19.8B (+26%), online stores +15%, third-party seller services +16%, net income $62.6B including $53.4B of non-operating income primarily from investments in Anthropic, TTM operating cash flow $161.4B against net capital purchases $169.0B and free cash flow -$7.6B; AWS AI business and chips business each above a $25B run rate; Trainium commitments from Anthropic and OpenAI; Amazon Leo at nearly 400 satellites, enough to begin initial service this year; Zoox's NHTSA Part 555 exemption to charge for rides; Alexa+ triers signing up for Prime at a nearly 25% higher rate; supplemental table Q1 2025-Q2 2026 (WW shipping cost growth 3%, 6%, 8%, 10%, 14%, 19%; WW paid unit growth 8%, 12%, 11%, 12%, 15%, 17%; seller unit mix 60-62%; North America TTM operating margin 7.4%); Q3 2026 guidance of $197.0-202.0B net sales and $22.5-26.5B operating income, with growth nearly 400 basis points higher excluding Prime Day in both years — Q2 2026 — quarter ended June 30, 2026 · publ. July 30, 2026 · source ↗
  7. ReportedIn the second quarter of 2026 it grew 37% to $42.2 billion, its fastest growth in eighteen quarters, at a 39.4% operating margin, and customers had signed up for $496 billion of future spending it had not yet recognised.
    Amazon.com Inc., Form 10-Q for the quarter ended June 30, 2026 — purchases of property and equipment $54,208M in Q2 2026; remaining performance obligations of approximately $496 billion (weighted-average remaining life 6.4 years), after OpenAI expanded its existing $38.0 billion commitment by $100.0 billion over 8.0 years in Q1 2026 and Anthropic expanded its commitment by more than $100.0 billion over 10.0 years in Q2 2026; upward adjustments to private equity investments of $50.5 billion in Q2 2026 and $62.8 billion in the six months, primarily nonvoting preferred stock in Anthropic; about $640 million of IEEPA tariff refunds recorded mainly as a reduction to cost of sales; shipping costs $27.9 billion against $23.4 billion — Q2 2026 — quarter ended June 30, 2026 · publ. July 2026 · source ↗
  8. ReportedOver the twelve months to June the whole company sold $775.7 billion and earned $93.7 billion of operating income; AWS supplied 58% of it.
    Amazon.com, second-quarter 2026 results release (Form 8-K, Exhibit 99.1) — net sales $200.6B (+20%), operating income $27.5B (13.7% margin), AWS sales $42.2B (+37%, fastest growth in 18 quarters, $169B annualized run rate) and operating income $16.6B (39.4% margin, against 32.9% a year earlier), advertising $19.8B (+26%), online stores +15%, third-party seller services +16%, net income $62.6B including $53.4B of non-operating income primarily from investments in Anthropic, TTM operating cash flow $161.4B against net capital purchases $169.0B and free cash flow -$7.6B; AWS AI business and chips business each above a $25B run rate; Trainium commitments from Anthropic and OpenAI; Amazon Leo at nearly 400 satellites, enough to begin initial service this year; Zoox's NHTSA Part 555 exemption to charge for rides; Alexa+ triers signing up for Prime at a nearly 25% higher rate; supplemental table Q1 2025-Q2 2026 (WW shipping cost growth 3%, 6%, 8%, 10%, 14%, 19%; WW paid unit growth 8%, 12%, 11%, 12%, 15%, 17%; seller unit mix 60-62%; North America TTM operating margin 7.4%); Q3 2026 guidance of $197.0-202.0B net sales and $22.5-26.5B operating income, with growth nearly 400 basis points higher excluding Prime Day in both years — Q2 2026 — quarter ended June 30, 2026 · publ. July 30, 2026 · source ↗
  9. Moat Explorer calcOver the twelve months to June the whole company sold $775.7 billion and earned $93.7 billion of operating income; AWS supplied 58% of it.
    Moat Explorer calculation from Amazon's Form 10-K segment and product-line tables (FY2022-FY2025) and the quarterly results releases: AWS share of operating income = AWS operating income / consolidated operating income ($45,606M / $79,975M = 57.0% in 2025; ($14,161M + $16,621M) / ($23,852M + $27,461M) = 60.0% in H1 2026; $16,621M / $27,461M = 60.5% in Q2 2026; $54,681M / $93,712M = 58.3% TTM); AWS share of net sales $128,725M / $716,924M = 18.0%; retail segments' operating income $29,619M + $4,750M = $34,369M on $588,199M = 5.8%; 2022 segment operating income North America -$2,847M, International -$7,746M, AWS $22,841M against a consolidated $12,248M; North America operating margin -$2,847M / $315,880M = -0.9% in 2022; advertising TTM to June 2026 $17,703M + $21,317M + $17,243M + $19,809M = $76,072M — FY2022-Q2 2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from Amazon's filed segment, product-line and supplemental tables; see the source line for each operand.
Sources
Generated September 22, 2026