Is AWS Worth More Than All Of Amazon?

"Of Amazon's ( NASDAQ: AMZN | MSFT Price Prediction) $717 billion in revenue last year, $128 billion came from AWS. Amazon's e-commerce business grew at about 8%. The AWS revenue growth was 20%. A more telling number is that, out of Amazon's $80 billion in operating income, 56% came from AWS. Fundamentally, these are two different businesses. AWS is the largest cloud computing business in the world."

"The leap of faith regarding the AWS valuation is whether AI will accelerate its growth at a faster pace than it is today, and whether this will apply directly to AWS. AWS's numbers will also depend on substantial capital expenditures, which over the next two years could amount to nearly half a trillion. (E-Commerce said it would use AI, but primarily for logistics and personnel management.)"

"To go further, one aspect of AWS's value proposition is the extent to which it is regarded as an AI pure-play. OpenAI is valued at $830 billion. Its revenue last year was about $20 billion. That is a 42x ratio. Applied to AWS, the figure would be as high as about $5.4 trillion. Since it would be difficult to establish that AWS is a pure-play AI, the multiple will be well below that."

Amazon reported $717 billion in revenue, with $128 billion from AWS. E-commerce growth was about 8% while AWS revenue grew 20%. AWS provided 56% of Amazon's $80 billion operating income, reflecting different economics between cloud and retail. AWS holds roughly 29% cloud market share versus Microsoft's 23% for Azure. AI adoption could accelerate AWS growth but will require substantial capital expenditures potentially nearing half a trillion dollars over two years. Valuation comparisons using OpenAI multiples suggest a wide range for AWS value; combining conservative AWS and e-commerce valuations implies roughly $5 trillion total value.

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