AMZN 4Q2019 Results show revenue growth of 22% across the business with AWS growth at 35%. AMZN total revenue for 2019 was $285B with AWS at $35B revenue and 4Q2019 revenue of $10B with 26% operating margin implies $50+B expected revenue for 2020 and $12.5B profit in AWS.
AWS and Alexa Innovation Continues with AWS Outpost allowing Private and Hybrid Clouds and AWS Local allowing low latency and increasing usage possibilities. Amazon Prime has a good year consolidating #2 position behind NFLX in video streaming. Alexa continues to expand its presence. AMZN now has 150M+ prime subscriptions. Retail business continues to advance with help from one day shopping.
Challenges for AMZN including regulation and specifics challenges in India due to high competition. Political Risk in US and India also exist due to Jeff Bezos also owning a Washington Post.
Valuing AMZN is a very tough job as there are many moving parts. On a long term basis AWS could be valued at 7-11 times Annual Revenue considering the growth potential and lead in innovation. This would imply $280B to $440B for AWS alone. Alexa, Echo, Fire TV, Ring Doorbell and other AI aspects could be valued between $50B to $100B on a long term basis. AMZN Logistics which is becoming a major competitor of FDX and UPS could be valued between $50B to $100B on the long term basis if logistics services can be provided for 3rd parties. Prime Video and AMZN Fashion etc are added value. So a case can be made that 65% of $925B AMZN valuation (at $1835 decent price) is accounted for by these non retail businesses. Retail business could still grow long term and could be valued at $300 to $500B. 10 years ago many of these added businesses did not exist so who knows what AMZN would consist of in another 10 years if innovation continues.
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