stockrowWhat it does
Amazon operates online and physical stores, a marketplace for independent sellers, and a cloud computing business called Amazon Web Services, or AWS. Founded by Jeffrey P. Bezos, the company is headquartered in Seattle and led by President and CEO Andrew R. Jassy.
In its stores, Amazon sells merchandise and content it buys for resale alongside products offered by third-party sellers. Shoppers can use its websites, mobile apps and devices or visit physical stores. Amazon also makes devices such as Kindle and Echo, produces media content, and offers Prime, a membership that combines shipping and entertainment benefits.
Independent sellers can list products in Amazon’s stores and use its services to fulfill orders. Amazon also provides advertising to sellers and other businesses, including sponsored ads, display ads and video ads. Authors, publishers, musicians and other creators can use Amazon programs to publish and sell content.
AWS supplies on-demand computing services to developers and organizations, including businesses, government agencies and academic institutions. Its services include computing power, data storage, databases, analytics and artificial intelligence. Customers can use these services without building all of the underlying technology infrastructure themselves.
Amazon manages its operations through North America, International and AWS segments. Its retail operations deliver orders through Amazon’s own fulfillment networks, outside arrangements, digital delivery and physical stores.
How it makes money
Amazon earns revenue when it sells products from its own inventory and when it provides services to sellers, advertisers, subscribers and AWS customers. For its own inventory, it generally records the full sale as product revenue. For items sold by third parties, Amazon generally records its own share as service revenue rather than the full value of the transaction.
Seller programs generate fixed fees, a percentage of sales, per-unit activity fees, interest or a combination of these charges. Sellers can also use Amazon’s fulfillment services. Advertising customers pay for formats including sponsored, display and video ads. Prime and digital content subscriptions provide another source of service revenue.
AWS sells on-demand technology services, including computing, storage and databases. Customers range from startups to large enterprises, government agencies and academic institutions. AWS reported $128.7 billion in revenue in FY2025, while third-party seller services generated $172.2 billion and advertising services generated $68.6 billion. Subscription services contributed $49.6 billion in FY2025.
The North America and International segments cover Amazon’s geographically organized retail operations, while AWS is reported separately. North America revenue was $426.3 billion and International revenue was $161.9 billion in FY2025.
In Q3 2026, Amazon reported growth in worldwide and AWS revenue.
Sales volumes have historically been higher in the fourth quarter. Revenue and cash flow can also be affected by the mix of Amazon’s own product sales and third-party services, as well as by inventory and payment timing.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Third-party seller services | $172.2 billion | 38.5% | 10.3% |
| AWS | $128.7 billion | 28.8% | 19.7% |
| Advertising services | $68.6 billion | 15.3% | 22.1% |
| Subscription services | $49.6 billion | 11.1% | 11.8% |
| Physical stores | $22.6 billion | 5.04% | 6.34% |
| Other | $5.9 billion | 1.33% | 9.40% |
Customers and how it sells
Amazon serves consumers, independent sellers, developers, enterprises, content creators and advertisers. Consumers access its stores through websites, mobile apps, Alexa, devices and physical locations. Prime members receive shipping and entertainment benefits, while sellers can use Amazon’s stores and fulfillment services to reach shoppers.
AWS customers include startups, government agencies and academic institutions as well as other enterprises. Amazon has named Capital One, IBM, Infor, Luminate and Robinhood as customers using AWS Continuum, its service for addressing code vulnerabilities. Advertisers include sellers, vendors, publishers and authors.
The United States accounted for 68.3% of Amazon’s revenue in FY2025. Germany contributed $45.9 billion, the United Kingdom $43.2 billion and Japan $30.7 billion in that year. Amazon also operates in other countries, with $107.5 billion of FY2025 revenue attributed to the rest of the world.
Amazon organizes retail operations into North America and International segments, rather than assigning AWS to those geographic retail segments. It operates fulfillment networks in North America and internationally, supplements them with other arrangements in certain countries, and operates customer service centers globally. International results are exposed to changes in exchange rates.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| United States | $489.7 billion | 68.3% | 11.8% |
| Rest of world | $107.5 billion | 15.0% | 14.5% |
| Germany | $45.9 billion | 6.40% | 12.3% |
| United Kingdom | $43.2 billion | 6.03% | 14.2% |
| Japan | $30.7 billion | 4.28% | 12.0% |
Suppliers and costs
Amazon buys merchandise and content for resale and also manufactures electronic devices. It enters supplier commitments for certain device components and products based on expected customer demand; reducing those commitments can bring additional costs. Amazon seeks more direct sourcing and supplier discounts to reduce variable costs per unit.
Variable costs include products and content, payment processing, preparing and transporting orders, customer service, AWS operations and some marketing. Fixed costs include technology infrastructure, development of stores and services, and the fulfillment network. Amazon also uses contractors and temporary personnel alongside its employees.
Amazon’s advanced chips are subject to allocation from a single provider with limited annual production. The company must decide how much of that allocation to use in AWS and how much to sell externally. Amazon also develops its own chips for use in its services.
Cash capital expenditures in 2025 were primarily for technology infrastructure and fulfillment capacity. In Q3 2026, cash capital expenditure was primarily related to AWS and AI. Amazon expects technology and infrastructure spending to increase over time, which can reduce short-term free cash flow. It also reported higher fulfillment transportation costs from fuel inflation and higher line-haul rates in Q3 2026.
- Revenue$716.9B
- Cost of revenue−$356.4B
- Research and development−$108.5B
- Selling, general and administrative−$167.4B
- Other operating costs−$4.6B
- Operating income$80.0B
Competitive position
Amazon competes across retail, cloud computing, advertising, fulfillment, digital content, devices, grocery and other services. Retail competition includes physical, online and combined-channel sellers. AWS competes with providers of on-premises and cloud technology, while Amazon’s advertising and fulfillment services compete with other providers of those services.
It was reported on 29 October 2026 that Walmart offered delivery in some places while Amazon expanded its same-day grocery service. It was also reported on 29 October 2026 that both Amazon’s and Google’s cloud marketplaces were channels for Anthropic revenue, and that Amazon, Google and Microsoft supplied computing power used to train and run Claude.
Amazon identifies selection, price, convenience and fulfillment as retail competitive factors. For seller and enterprise services, it identifies service quality, speed and reliability, as well as customers’ willingness and ability to change their business practices. The company also regards its intellectual property as important to its business.
Our reading: Amazon’s store selection, seller programs and fulfillment network provide a meaningful competitive position because they combine shopping access with services sellers can use to reach customers. Our reading: AWS’s range of services and the effort involved in changing business practices can help retain enterprise customers, although rivals offer competing infrastructure and new technology can make entry easier.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Walmart | Grocery and rapid delivery | Medium |
| Cloud marketplaces and AI computing | High | |
| Microsoft | AI computing capacity | High |
Growth opportunities
Amazon is investing in its stores, fulfillment network, AWS and new technology. Its retail priorities include faster delivery, lower cost to serve, groceries, pharmacy and AI-assisted shopping. The company is expanding same-day delivery capacity and using robotics in fulfillment; it also develops media, devices and other consumer services.
In AWS, Amazon is adding computing capacity and investing in AI services and custom chips. It says Bedrock, its AI inference service, has added OpenAI models. Amazon intends to make its Trainium chips available outside AWS late in 2027, while continuing to use chips in its cloud services.
AWS revenue grew year over year in Q3 2026. Amazon expects AWS to continue growing in 2027 and 2028 and believes it can become a larger revenue business over time. These are company expectations, not guaranteed outcomes.
Amazon expects the majority of its 2026 cash capital expenditure to be for AWS, and expects to spend more in 2027. The company also estimates that most global IT spending remains on premises, presenting an opportunity for cloud services. Outside its established segments, Amazon is developing a satellite network for global broadband and autonomous vehicles for ride-hailing.
- $469.8BFY2021
- $514.0BFY2022
- $574.8BFY2023
- $638.0BFY2024
- $716.9BFY2025
Structural risks
- Competition and changing markets: Amazon faces competitors across retail, technology, advertising and logistics. Competitors may secure better supplier terms, price more aggressively or direct customers to their own offerings. New technologies can also make it easier for smaller businesses to compete.
- Investment and capacity: Expanding products, infrastructure and AI capabilities strains operational and financial resources. Technology spending can reduce short-term free cash flow, while the timing and cost of infrastructure upgrades affect results.
- Supply and fulfillment costs: Transportation, fuel, energy, hardware and technology infrastructure can become more expensive or less available. Amazon’s advanced-chip supply is allocated by a provider with limited annual production, and supplier commitments can create costs if demand changes.
- International operations: Tariffs, trade restrictions, regulation, geopolitical events and currency movements can affect overseas sales and operations. Local infrastructure and staffing constraints can also limit operations.
- Demand and execution: Demand can fluctuate with seasonality, economic conditions and other events. Amazon’s results depend in part on managing inventory, fulfilling orders, retaining sellers and attracting customers; newer products and services may not be adopted.
- Technology and legal exposure: Computer intrusions, data theft, outages and similar events can affect use of Amazon’s services. Legal proceedings and claims may result in monetary damages or restrictions on its activities.
Bottom line
Our reading
Amazon combines a retail and seller marketplace with advertising, subscriptions and a separate cloud infrastructure business. Our reading: its store and fulfillment network support several ways of earning revenue, while AWS adds a business serving organizations’ technology needs.
Our reading: growth depends in part on turning substantial infrastructure investment into customer usage and cash flow, while managing competition, supply constraints and the costs of delivering goods and computing services.