The Amazon story

What drives the business

• Amazon combines a large retail and delivery network with AWS, which accounted for 21% of revenue but most operating profit in the quarter to June 2026.
• Its February 2026 OpenAI partnership makes AWS the exclusive third-party cloud distribution provider for OpenAI Frontier and includes commitments for 2 gigawatts of Trainium capacity, alongside Amazon's planned $50 billion investment in OpenAI.
• AWS added $200.0 billion to contracted backlog across the quarters to March and June 2026, comprising $100.0 billion from OpenAI and $100.0 billion from Anthropic.
• In the quarter to June 2026, North America segment sales grew 16% to $116.2 billion and International sales grew 15% to $42.2 billion, while advertising revenue grew 26%.
• Amazon's AI and chips businesses each surpassed $25 billion in annualized revenue run rate in the quarter to June 2026, with both growing at triple-digit percentages.

What the price assumes

At $246.15, the reverse DCF implies operating earnings growth of 15.9% a year for ten years, using a 10.2% discount rate.

That compares with delivered operating earnings growth of 50.3% a year over the last 10 years and the TenQ check's 27.1% bar, which slows that record halfway toward 4%.

The calculation uses operating earnings in place of free cash flow, so its growth assumption does not directly measure the cash left after Amazon's infrastructure spending.

Value AMZN on your own assumptions

What could change the story

• Purchases of property and equipment, net of proceeds and incentives, increased by $66.1 billion over the twelve months to June 2026, primarily for AI, leaving cash generation dependent on how spending develops alongside demand.
• OpenAI and Anthropic's large AWS commitments create customer concentration, while Amazon's investments in AI labs also expose reported earnings to investment-related gains rather than operating performance alone.
• The $53.4 billion of non-operating pre-tax other income in the quarter to June 2026 makes net income a less direct measure of progress in retail and cloud operations.
• Amazon fails TenQ's near-term liquidity check at 1.03 against a 1.50 bar, despite $123.0 billion in cash and short-term investments.
• Shares increased 6.3% over the last three years, and $19.3 billion of stock-based pay over the last twelve months was not offset by share repurchases.

What to watch next

• Amazon expects net sales of $197.0 billion to $202.0 billion in the quarter to September 2026, representing growth of 9% to 12%.
• Prime Day timing complicates that comparison, with growth nearly 400 basis points higher excluding its impact and guidance incorporating an unfavorable foreign exchange effect of approximately 80 basis points.
• Operating income guidance is $22.5 billion to $26.5 billion, compared with $17.4 billion in the quarter to September 2025.
• AWS revenue and operating income, conversion of AI commitments into revenue, and property and equipment spending relative to operating cash flow are the key measures of whether expansion is becoming more self-funding.

Sources

• Amazon's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The AMZN stock report, for every figure and check