Amazon.com Inc.

AMZN ·Consumer Cyclical, Specialty Retail, United States

Amazon.com, Inc. (AMZN)

Overview

Amazon.com, Inc. is a Seattle, Washington-based technology and retail conglomerate, and one of the largest companies in the world by revenue and market capitalization. It sits within the S&P 500's Consumer Discretionary sector (its retail operations) even though a large and growing share of its profit comes from cloud computing and advertising, businesses that behave more like enterprise technology franchises. For fiscal year 2025, Amazon reported net sales of $716.9 billion and net income of $77.7 billion, and as of mid-2026 it employed roughly 1.6 million full-time and part-time workers worldwide, making it one of the largest private employers on earth. Andy Jassy, who previously built and ran Amazon Web Services, has served as CEO since 2021.

What They Do & How They Make Money

Amazon's business is best understood as three interlocking engines rather than a single retailer. The most visible is online retail: Amazon operates e-commerce sites in dozens of countries selling everything from books (its original product) to groceries, electronics, and apparel, either as the seller of record ("first-party" sales) or as a marketplace host. The marketplace model is central to profitability — millions of third-party sellers list products on Amazon's platform and pay the company commissions, fulfillment fees (via Fulfillment by Amazon, which stores, packs, and ships their goods), and advertising fees, meaning Amazon earns revenue on those sales without carrying the inventory risk itself. Layered on top of retail is a subscription business, principally Amazon Prime, which charges an annual or monthly fee in exchange for fast shipping, video and music streaming, and other perks; Prime both generates high-margin subscription revenue and deepens customer loyalty that reinforces the retail flywheel. A separate and increasingly important revenue stream is advertising, where brands and sellers pay to promote products in search results and across Amazon's properties — a business that now generates tens of billions of dollars annually at software-like margins. Finally, and most important to Amazon's overall profitability, Amazon Web Services (AWS) rents out computing power, storage, databases, machine-learning tools, and other infrastructure to businesses and governments on a pay-as-you-go basis, functioning as the backbone of much of the modern internet and, increasingly, as a platform for AI workloads.

Business Segments

Amazon reports results in three segments, as disclosed in its SEC filings:

North America — Retail (including third-party seller services), advertising, and subscription revenue generated in the U.S., Canada, and Mexico. This is Amazon's largest segment by revenue: $426.3 billion in FY2025 (about 59% of total net sales) and $29.6 billion in operating income, reflecting thin but positive retail margins.
International — The same retail, marketplace, advertising, and subscription businesses outside North America, spanning markets such as the UK, Germany, Japan, and India. This segment generated $161.9 billion in FY2025 revenue (about 23% of the total) but only $4.7 billion in operating income, as many international markets remain less mature and less profitable than the U.S.
AWS — Cloud infrastructure and platform services sold globally to enterprises, startups, and governments. AWS generated $128.7 billion in FY2025 revenue (about 18% of total net sales) but $45.6 billion in operating income — meaning AWS, despite being the smallest segment by revenue, produced roughly 57% of Amazon's total segment operating income. AWS growth has accelerated recently on AI-related demand; in Q2 2026 it grew 37% year-over-year, its fastest pace in over four years, with quarterly revenue and operating income of $42.2 billion and $16.6 billion respectively.

This structure explains why investors watch AWS so closely: it is the profit engine that subsidizes and funds Amazon's lower-margin, capital-intensive retail and logistics network, while advertising (folded mostly into the North America and International segments) has become a third, high-margin growth lever layered on top of retail.

Competitors

Amazon's competitive set varies significantly by business line:

E-commerce / online retail: Walmart, Target, Costco, and other big-box and grocery retailers with growing e-commerce operations; Shopify (which powers independent online storefronts for many brands that might otherwise sell on Amazon); fast-growing international marketplaces such as Temu, Shein, and AliExpress (owned by PDD Holdings and Alibaba); eBay; and, in specific categories, vertical specialists (e.g., Chewy in pet supplies, Wayfair in home goods, Best Buy in electronics).
Cloud computing (AWS): Microsoft Azure and Google Cloud Platform are the two largest direct rivals, alongside smaller or more specialized players such as Oracle Cloud, IBM Cloud, and Alibaba Cloud internationally.
Digital advertising: Google (Search and YouTube), Meta (Facebook and Instagram), Walmart Connect, and TikTok compete for the same brand and performance-advertising budgets Amazon pursues through its retail search and display inventory.
Streaming and media (Prime Video, Amazon Music): Netflix, Disney+, Apple TV+, Max (Warner Bros. Discovery), and Spotify.
Logistics and delivery: FedEx, UPS, and the U.S. Postal Service, as Amazon's in-house delivery network (Amazon Logistics) increasingly competes with, rather than merely relies on, traditional parcel carriers.
Smart devices and voice assistants: Google (Nest, Google Assistant), Apple (Siri, HomePod), and Samsung compete with Amazon's Echo/Alexa device ecosystem.

Competitive Position

Amazon's core moat is scale reinforced by network effects across its businesses. On the retail side, its enormous selection, fast and reliable delivery (underpinned by one of the world's largest private logistics networks), and the Prime subscription create a flywheel: more Prime members attract more third-party sellers, more sellers deepen selection and lower prices, and better selection and price attract more customers and further advertising dollars — a cycle that is difficult and expensive for competitors to replicate. In cloud computing, AWS holds the leading market share globally at roughly 28-30% of cloud infrastructure spend, ahead of Microsoft Azure (around 20-24%) and Google Cloud (around 12-14%), according to recent industry estimates; its advantage rests on the breadth of its service catalog, high customer switching costs once workloads are built on its platform, and years of infrastructure investment. Advertising has become a genuine third pillar, giving Amazon a high-margin, capital-light growth business that helps offset thin retail margins.

That said, Amazon faces real and growing risks to its position. In cloud, Microsoft's deep enterprise relationships and aggressive bundling of Azure with Office/AI products, and Google's strength in AI infrastructure and data/analytics tooling, mean AWS's growth lead, while currently accelerating on AI demand, is not guaranteed to hold — Azure and Google Cloud have both posted faster percentage growth rates in various recent quarters. In retail, Amazon faces intensifying low-price competition from Temu and Shein, which are reshaping consumer expectations around price (particularly for discretionary goods), as well as continued share gains by Walmart and Costco, which have narrowed the value gap with Amazon while offering integrated physical-store convenience. Regulatory and antitrust scrutiny is another persistent risk: Amazon is defending an FTC antitrust lawsuit in the U.S. alleging illegal maintenance of monopoly power in online retail, and it faces ongoing regulatory pressure in the EU and other markets over marketplace practices, labor conditions, and data use. Finally, Amazon's enormous and rising capital expenditures — roughly $200 billion projected for 2026, overwhelmingly directed at AI and data-center infrastructure — represent both the foundation of its AWS growth story and a significant execution and capital-allocation risk if AI demand or returns fail to materialize as expected. Overall, Amazon remains a dominant, diversified franchise with genuine structural advantages in retail logistics, cloud infrastructure, and advertising, but it operates in categories where well-capitalized rivals (Walmart, Microsoft, Google, and fast-moving Chinese e-commerce entrants) are all investing heavily to close the gap.