Amazon.com Inc.

Overview Key strengths Key risks Substantial global brand recognition and consistent track record of strong revenue and market share growth. Volatile profitability in the online retail segment with costs related to fulfillment network expansion, technology, and marketing constraining margins. Leading positions in the key online retail and web services markets, both of which have solid growth prospects. Large, well-funded competitors across key business segments. High margins in the web services segment and advertising driving margin expansion. Ongoing regulatory scrutiny in many regions surrounding tech companies' impact on economies and individuals raises the possibility of government intervention that could affect business strategies. Improving credit protection measures forecasted over the next two years on EBITDA growth, debt reduction and moderating capital spending.

...We expect Amazon will generate outsized long-term revenue and earnings growth from ongoing secular digital transformation trends. Amazon's scale, operating prowess and leading market position in digital commerce and cloud computing position it to be a share gainer as more commerce is conducted online. According to the U.S. Census Bureau, total U.S. retail e- commerce sales grew 7.7% in 2022, surpassing $1 trillion, and represented almost 15% of total retail sales, up from 11% in 2019. We anticipate online sales penetration will continue to expand as consumer preferences for the convenience, selection and price transparency of online shopping grows. Further, we expect Amazon's leadership in cloud-based services through its AWS segment will enable it to benefit as more businesses shift IT spending to the cloud. Amazon's sharpened focus on managing costs and strengthening efficiency within its fulfillment networks is driving improvements in e-commerce profitability. A significant expansion...

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