Amazon is not just an e-commerce titan. It is also the global cloud leader (AWS), a logistics empire, and a dominant force in AI and advertising. After years of profitability pressure, Amazon is back with impressive earnings and a rebound in margins.
However, despite strong net income and EBITDA growth, the free cash flow collapse raises a red flag. Valuation is demanding—investors are paying today for the expectations of tomorrow.
Consolidated Financial Performance (2023 – 2025)
| Metric | 2023 | 2024 | 2025 | Trend |
|---|---|---|---|---|
| Revenue | $574.79B | $637.96B | $691.33B | ⬆️ +20.3% |
| EBITDA | $86.28B | $122.15B | $141.68B | ⬆️ +64.2% |
| Net Income | $30.43B | $59.25B | $76.48B | ⬆️ +151% |
| EPS (Diluted) | $2.90 | $5.53 | $7.08 | ⬆️ +144% |
| Operating Income | $37.62B | $69.36B | $79.76B | ⬆️ +112% |
Amazon doubled its net profit and operating income in 2 years. Cloud services (AWS), advertising, and cost discipline are driving the rebound in margins.
Margins & Profitability
| Margin Type | FY 2023 | FY 2024 / TTM 2025 | Interpretation |
|---|---|---|---|
| Gross Margin | 46.98% | 50.05% | Efficient supply chain |
| Operating Margin | 6.54% | 11.54% | Strong rebound |
| Net Margin | 5.29% | 11.06% | Profitability doubled |
📌 Commentary:
Margins are back to pre-2022 levels. Amazon proves it can scale profitably even with slower top-line growth.
Cash Flow & Capital Allocation
| Metric | FY 2023 | FY 2024 | TTM 2025 | Trend/Analysis |
|---|---|---|---|---|
| Cash Flow from Ops | $84.95B | $115.88B | $130.69B | Strong growth |
| CapEx | -$52.73B | -$83.00B | -$120.13B | Massive reinvestment |
| Free Cash Flow | $32.22B | $32.88B | $10.56B | -67% |
| Net Change in Cash | +$19.64B | +$8.42B | -$8.21B | Cash burn |
Commentary:
Despite growing operating cash flow, FCF has collapsed due to heavy CapEx—most likely into AI, AWS expansion, and logistics. Strategic, but not sustainable long-term unless margins keep rising.
Valuation & Market Multiples
| Metric | Value (TTM) | Interpretation |
|---|---|---|
| P/E | ~32x | Reasonable for Big Tech |
| Price/FCF | ~235x | Excessive – priced for perfection |
| Price/Sales | ~3.6x | Reasonable for a tech/retail hybrid |
| Shares Outstanding | 10.69B | Stable – no massive buybacks |
Conclusion:
While the P/E is fine, the Price to Free Cash Flow ratio is unsustainable. Amazon must significantly grow cash flow to justify this level.
Key Risks
| Risk | Level | Comment |
|---|---|---|
| Free Cash Flow collapse | High | Needs to reverse within 12–18 months |
| Heavy CapEx | High | Only justified if returns materialize (AI, logistics) |
| Regulatory/Antitrust scrutiny | Medium | Especially in EU/US on AWS, data, and monopoly power |
| Cyclical consumer demand | Medium | Amazon depends on global consumption cycles |
Price Targets & Scenarios
| Scenario | Price Target | Context | Potential (vs $232) |
|---|---|---|---|
| 📉 Bearish | $180 – $200 | Persistent FCF weakness + CapEx overspend | -13% to -23% |
| ⚖️ Neutral | $225 – $240 | Earnings stabilize, no major upside | ±0–3% |
| 🚀 Bullish | $270 – $300 | AWS & AI margin expansion, FCF recovery | +16% to +29% |
Final Recommendation
| Factor | Evaluation |
|---|---|
| Revenue Growth | Strong & global |
| Margin Expansion | Recovered brilliantly |
| Free Cash Flow | At risk due to CapEx |
| Shareholder Return | No dividends/buybacks |
| Valuation | Price/FCF too demanding |
| Long-Term Potential | Cloud + AI = huge runway |
Verdict: HOLD – Buy below $200
Amazon is still a pillar of modern tech and logistics.
But at 235x FCF, it’s overpriced in the short term.
Investors should wait for a pullback unless there’s a sharp rebound in free cash flow.
Disclaimer :
This content is for informational purposes only and does not constitute investment advice. All investments carry risk, including the loss of capital. Conduct your own research before making any decision.
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