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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 net sales and operating income, Q3 2026 (%)Share of net salesShare of operating incomeNorth America55.9%31.1%International21.3%5.6%AWS22.8%63.3%Calc from the Q3 2026 segment table: $112,852M, $43,108M and $45,984M of $201,944M; $8,723M, $1,580M and $17,773M of $28,076M
AWS is under a quarter of the sales and nearly two-thirds 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 third quarter of 2026 it grew 39% to $46.0 billion, its fastest growth in nearly five years, at a 38.7% operating margin6, and as of the last disclosure customers had signed up for $496 billion of future spending it had not yet recognised7. Over the twelve months to September the whole company sold $797.5 billion and earned $104.4 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
$201.9B in Q3 2026, +12%; AWS $46.0B of it (23%)

AWS is now 23% of revenue and earned 63% of the quarter's operating income. The store's lines grew 2-9% because Prime Day fell in the June quarter this year and in the September quarter last; AWS grew 39%. A quarter in which AWS growth fell back below 20% would say the AI demand that is carrying the whole company had passed.

Source: Amazon Q3 2026 results 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 (Q3 2026)
The best operating margin Amazon has ever reported and AWS's fastest growth in five years, in a quarter when net income still fell and free cash flow…
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 third quarter of 2026 it grew 39% to $46.0 billion, its fastest growth in nearly five years, at a 38.7% operating margin, and as of the last disclosure customers had signed up for $496 billion of future spending it had not yet recognised.
    Amazon.com, third-quarter 2026 results release (Form 8-K, Exhibit 99.1) — net sales $201,944M (+12%, +13% excluding a $0.9B unfavorable foreign-exchange impact), operating income $28,076M (+61%) at a 13.9% operating margin, described in the release's own headline as Amazon's highest operating margin ever; net income $20,685M and diluted EPS $1.89, both lower than the $21,187M and $1.95 of third quarter 2025, which the release attributes primarily to $9.5B of pre-tax gains on the investments in Anthropic recorded in that earlier quarter; total non-operating expense of $1,207M in the quarter (interest income $1,187M, interest expense $1,691M against $538M, other expense $703M) against non-operating income of $10,748M a year earlier; segment results North America net sales $112,852M (+6%) and operating income $8,723M (7.7% margin against 4.5%), International $43,108M (+5%, +8% excluding currency) and $1,580M (3.7% against 2.9%, +42% excluding currency), AWS $45,984M (+39%, its fastest growth in nearly five years, a $184 billion annualised revenue run rate) and $17,773M (38.7% margin against 34.6%); net sales mix North America 56%, International 21%, AWS 23%; the Prime Day timing shift, with the event in the second quarter this year for most large countries and entirely in the third quarter in 2025, without which third-quarter growth would have been approximately 400 basis points higher; net sales by product line online stores $68,470M (+2%), third-party seller services $46,492M (+9%, +10% excluding currency), advertising services $19,637M (+11%, +12% excluding currency, after 22% excluding currency in each of Q2 2025, Q3 2025, Q4 2025 and Q1 2026 and 26% in Q2 2026), subscription services $14,006M (+11%), physical stores $5,710M, other $1,645M; worldwide shipping costs $28,295M (+11%) against worldwide paid unit growth of 12% and a seller unit mix of 61%; employees 1,638,000 (+4%); trailing-twelve-month net sales $797,455M, operating income $104,366M at a 13.1% margin, net income $134,779M and diluted EPS $12.37, operating cash flow $168,300M (+29%), purchases of property and equipment net of proceeds $210,657M (+82%) and free cash flow of minus $42,357M against plus $14,788M a year earlier, with the supplemental table's trailing free-cash-flow series $18,184M, $14,788M, $11,194M, $1,232M, minus $7,604M and minus $42,357M for Q2 2025 to Q3 2026 and North America's trailing operating margin at 8.2%; purchases of property and equipment of $77,259M in the quarter and $175,670M in nine months; nine-month other income of $68,359M and a $78,788M pre-tax change in net unrealized gains on available-for-sale debt securities recorded in other comprehensive income; proceeds from long-term debt of $48,102M in the quarter and $115,100M in nine months, taking long-term debt from $65,648M at December 31, 2025 to $173,125M, total assets from $818,042M to $1,243,390M and other assets from $122,607M to $358,775M; Andy Jassy's statement of projected AWS revenue growth rates “of over 40% both in 2027 and in 2028”; and fourth-quarter 2026 guidance of $240.0-247.0B of net sales (+12% to +16%) and $28.5-33.5B of operating income against $25.0B, with 2026 cash capital expenditures still expected to be approximately $220 billion and fourth-quarter advertising revenue expected to grow in the high teens — Q3 2026 — quarter ended September 30, 2026 · publ. October 29, 2026 · source ↗
  7. ReportedIn the third quarter of 2026 it grew 39% to $46.0 billion, its fastest growth in nearly five years, at a 38.7% operating margin, and as of the last disclosure 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 September the whole company sold $797.5 billion and earned $104.4 billion of operating income; AWS supplied 58% of it.
    Amazon.com, third-quarter 2026 results release (Form 8-K, Exhibit 99.1) — net sales $201,944M (+12%, +13% excluding a $0.9B unfavorable foreign-exchange impact), operating income $28,076M (+61%) at a 13.9% operating margin, described in the release's own headline as Amazon's highest operating margin ever; net income $20,685M and diluted EPS $1.89, both lower than the $21,187M and $1.95 of third quarter 2025, which the release attributes primarily to $9.5B of pre-tax gains on the investments in Anthropic recorded in that earlier quarter; total non-operating expense of $1,207M in the quarter (interest income $1,187M, interest expense $1,691M against $538M, other expense $703M) against non-operating income of $10,748M a year earlier; segment results North America net sales $112,852M (+6%) and operating income $8,723M (7.7% margin against 4.5%), International $43,108M (+5%, +8% excluding currency) and $1,580M (3.7% against 2.9%, +42% excluding currency), AWS $45,984M (+39%, its fastest growth in nearly five years, a $184 billion annualised revenue run rate) and $17,773M (38.7% margin against 34.6%); net sales mix North America 56%, International 21%, AWS 23%; the Prime Day timing shift, with the event in the second quarter this year for most large countries and entirely in the third quarter in 2025, without which third-quarter growth would have been approximately 400 basis points higher; net sales by product line online stores $68,470M (+2%), third-party seller services $46,492M (+9%, +10% excluding currency), advertising services $19,637M (+11%, +12% excluding currency, after 22% excluding currency in each of Q2 2025, Q3 2025, Q4 2025 and Q1 2026 and 26% in Q2 2026), subscription services $14,006M (+11%), physical stores $5,710M, other $1,645M; worldwide shipping costs $28,295M (+11%) against worldwide paid unit growth of 12% and a seller unit mix of 61%; employees 1,638,000 (+4%); trailing-twelve-month net sales $797,455M, operating income $104,366M at a 13.1% margin, net income $134,779M and diluted EPS $12.37, operating cash flow $168,300M (+29%), purchases of property and equipment net of proceeds $210,657M (+82%) and free cash flow of minus $42,357M against plus $14,788M a year earlier, with the supplemental table's trailing free-cash-flow series $18,184M, $14,788M, $11,194M, $1,232M, minus $7,604M and minus $42,357M for Q2 2025 to Q3 2026 and North America's trailing operating margin at 8.2%; purchases of property and equipment of $77,259M in the quarter and $175,670M in nine months; nine-month other income of $68,359M and a $78,788M pre-tax change in net unrealized gains on available-for-sale debt securities recorded in other comprehensive income; proceeds from long-term debt of $48,102M in the quarter and $115,100M in nine months, taking long-term debt from $65,648M at December 31, 2025 to $173,125M, total assets from $818,042M to $1,243,390M and other assets from $122,607M to $358,775M; Andy Jassy's statement of projected AWS revenue growth rates “of over 40% both in 2027 and in 2028”; and fourth-quarter 2026 guidance of $240.0-247.0B of net sales (+12% to +16%) and $28.5-33.5B of operating income against $25.0B, with 2026 cash capital expenditures still expected to be approximately $220 billion and fourth-quarter advertising revenue expected to grow in the high teens — Q3 2026 — quarter ended September 30, 2026 · publ. October 29, 2026 · source ↗
  9. Moat Explorer calcOver the twelve months to September the whole company sold $797.5 billion and earned $104.4 billion of operating income; AWS supplied 58% of it.
    Moat Explorer calculation from Amazon's third-quarter 2026 results release and Form 10-K segment tables: AWS share of consolidated operating income = $45,606M / $79,975M = 57.0% for 2025, $17,773M / $28,076M = 63.3% in Q3 2026 and $61,020M / $104,366M = 58.5% over the twelve months to September 2026; AWS share of net sales = $128,725M / $716,924M = 18.0% for 2025, $45,984M / $201,944M = 22.8% in Q3 2026 and $161,382M / $797,455M = 20.2% trailing; North America segment operating margin = minus $2,847M / $315,880M = minus 0.9% in 2022 against the 8.2% trailing margin the Q3 2026 supplemental table reports; the increase in other assets = $358,775M less $122,607M = $236,168M; AWS revenue per quarter rising 17%, 20%, 24%, 28%, 37% and 39% excluding currency across Q2 2025 to Q3 2026; and shipping-cost growth of 11% against paid-unit growth of 12% in Q3 2026, one point of volume growth above cost — FY2022 — Q3 2026 · publ. 2026 · source ↗
Sources
Generated October 30, 2026