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 as costs related to fulfillment network expansion, technology, and marketing constrain margins. Leading positions in the key online retail and public cloud services markets, both of which have solid growth prospects. Reaccelerating capital expenditure (capex) to support upfront investments for added cloud infrastructure capacity. High margins in the web services segment and advertising drive margin expansion. Large, well-funded competitors across key business segments. Improving credit protection measures forecast over the next two years on EBITDA growth, significant free operating cash flow (FOCF) generation, and debt reduction. Ongoing regulatory scrutiny in many regions surrounding

...We expect Amazon.com Inc. 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 gain share as more commerce is conducted online. According to the U.S. Census Bureau, total U.S. retail e- commerce sales grew 7.6% in 2023 to $1.1 trillion, representing more than 15% of total retail sales. We anticipate online sales penetration will continue to expand as consumer preferences for the convenience, selection, and price transparency of online shopping grows. Amazon has built a commanding market share lead, but it faces stiff competition from both traditional and online-only retailers. Notably, big box retailers Walmart and Target are leveraging their sprawling store network to fulfill online orders and shorten delivery times. We expect spending on discretionary goods will continue to moderate this year given softer demand...

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