"Lee reminded me that activist investors have been pushing hard for a separation of AWS from the rest of the company. Their argument is straightforward. AWS is a high-margin global cloud leader. E-commerce is a low-margin, capital-intensive logistics platform. Combining them creates a valuation that obscures the true economics of each business. A split would let investors choose their exposure instead of buying two industries packaged into one ticker."
"I agreed with Lee that Amazon is one of the rare mega-cap companies where a breakup might actually increase shareholder value. The strategic relationship between AWS and e-commerce has thinned dramatically over the years. What once looked like an integrated flywheel now resembles two separate enterprises with different customers, cost structures, and competitive threats. AWS has become a cornerstone asset of the entire tech sector. E-commerce, by contrast, is increasingly pressured by competition, inflation-driven trade-down behavior, and rising last-mile costs."
Amazon's stock could react differently when retail underperforms while AWS posts strong results because valuation is more tied to cloud profitability. Activist investors advocate separating AWS to reveal distinct economics: AWS as a high-margin global cloud leader and e-commerce as a low-margin, capital-intensive logistics business. A split would allow investors to choose targeted exposure. The strategic integration between AWS and retail has diminished, making them operate like separate enterprises with different customers, cost structures, and competitive pressures. E-commerce faces competition, inflation-driven trade-downs, and rising last-mile costs, while AWS remains a cornerstone asset for the tech sector.
Read at 24/7 Wall St.
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