I've been adding Amazon (AMZN) to my portfolio in the past week; it is a bargain at $205, having dropped almost 20% from its high of $242.
AWS is a behemoth at $ 108 Bn in 2024 sales, and still growing at 19%. That is still remarkable growth for a market leader with two other 800-pound Gorillas, Alphabet and Microsoft, chasing it. It generated operating profits of $39 Bn last year, a growth of 66% with an operating profit margin of 37%.
Amazon's advertising revenue last year was estimated at $56Bn and growing around 20% a year. This is also a high operating margin business, generating over 20% in operating profits.
While online domestic and international sales are a drag, growing slower in single digits, they're not significantly slower than Walmart’s sales growth and margins.
Amazon Prime has about 200Mn members and is another sustainable, sticky, and high-margin business, valued at close to $360Bn.
I used a 10x multiple for the high-growth, high-profit margin, and sustainable businesses.
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||MCap $Bn|Sales $Bn|
|Company Wide|2,150|638|
|AWS 10x sales|1,020|107|
|Advertising 10x sales|600|56|
|Prime 10x sales|360|36|
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|Balance|170|439|
We’re getting the online and physical retail operations of $439 Bn at a market cap of just $170 Bn.
We haven’t even valued all their investments and partnerships under AI development. That can be very valuable in the future.