Financial Trends -- 8/10

• FY2025 revenue of $716.9B vs $638.0B in FY2024, up 12.4% YoY
• Growth reaccelerated from 8.6% (Q1 2025) to 13.6% (Q4 2025), driven by AWS reacceleration, advertising strength, and strong holiday quarter execution
• Q4 2025 revenue of $213.4B was the largest quarter in company history
• Revenue has more than doubled from $469.8B in FY2021 to $716.9B in FY2025

• Gross margin expanded consistently YoY across all 8 quarters, ranging from +120bps to +230bps
• FY2025 full-year gross margin of 50.3% vs 48.9% in FY2024 and 42.0% in FY2021 -- cumulative ~830bps of expansion over 4 years
• Expansion driven by higher-margin AWS and advertising revenue mix, fulfillment network optimization, and third-party seller services (62% 3P mix, highest ever)
• Q4 quarters show seasonally lower margins due to holiday fulfillment costs

• FY2025 operating income of $80.0B vs $68.6B in FY2024, up 17% YoY
• Operating margin expanded from 2.4% (FY2022) to 11.2% (FY2025) -- a 6.5x improvement in operating income under CEO Jassy
• Q3 2025 margin dipped to 9.7% due to $4.3B in special charges ($2.5B FTC settlement + $1.8B severance); excluding these, margin would have been approximately 12.0%
• Margin expansion has been broad-based: North America, International, and AWS all contributed

• FY2025 EPS of $7.17, more than doubling from $2.90 in FY2023
• YoY growth decelerated from 216% (Q1 2024) to 5% (Q4 2025) as the base normalizes -- this is expected after the sharp 2022-2023 earnings recovery
• Q3 2025 net income of $21.2B included a $9.5B Anthropic investment gain; Q4 2025 included $2.4B in special charges reducing EPS
• Consensus expects FY2026E EPS of approximately $7.85, implying ~9% growth

• AWS revenue grew from $25.0B (Q1 2024) to $35.6B (Q4 2025) -- a $142B annualized run rate
• Growth accelerated from approximately 17% to 24% YoY as AI workloads surged
• AWS backlog reached $244B at Q4 2025, up 40% YoY -- strongest indicator of forward demand
• Operating margin compressed from 39.5% (Q1 2025) to 32.9-35.0% range as the capex ramp drove higher depreciation; this is expected during investment cycles
• FY2025 AWS operating income of $45.6B represents 57% of total Amazon operating income

• North America is the largest segment (approximately 60% of revenue), with steady 8-10% growth and improving profitability
• International turned profitable in FY2023 and sustained positive operating income across all 8 quarters; operating margin improved from -6.6% (FY2022) to +2.9% (FY2025)
• AWS is the highest-margin segment (32-40% operating margins) and is accelerating on AI demand
• Q3 2025 North America op income dipped to $4.8B due to the $2.5B FTC settlement charge

• Revenue compounded from $469.8B (FY2021) to $716.9B (FY2025) -- a $247B increase in 4 years
• Operating income went from $24.9B to $80.0B, with FY2022 as the trough ($12.2B, 2.4% margin) during the post-COVID over-investment period
• FY2022 net loss of ($2.7B) was driven by investment write-downs (Rivian); the company returned to strong profitability in FY2023 and has compounded since
• Gross margin expanded ~830bps from 42.0% to 50.3% over 5 years -- structural improvement from higher-margin revenue mix (AWS, advertising, 3P services)
• EPS more than doubled from $2.90 (FY2023) to $7.17 (FY2025)

• FY2026E revenue of approximately $808B implies 12-13% growth, consistent with recent trajectory
• FY2026E EPS of approximately $7.85 implies approximately 9% growth -- conservative given operating leverage and AWS reacceleration
• Forward P/E of 26.7x on FY2026E is reasonable for a company with three oligopoly positions, 12%+ revenue growth, and expanding margins
• Average analyst price target of $281-$286 implies 34%+ upside from current $209.77

Revenue reaccelerated from approximately 10% to 13-14% YoY growth in H2 2025, driven by AWS reacceleration (17% to 24%), advertising strength (22% growth), and improving e-commerce execution. Operating margin expanded from 2.4% (FY2022) to 11.2% (FY2025) -- a transformational improvement. Gross margin expanded approximately 830bps over 5 years. EPS more than doubled from $2.90 (FY2023) to $7.17 (FY2025).

The primary concern preventing a higher score is FCF compression: TTM FCF declined from $53B to $11B due to the massive capex ramp ($125B in 2025, $200B guided for 2026). While operating cash flow grew 20% YoY to $139.5B, the investment cycle means reported FCF will remain depressed until capex moderates. This is investment-driven, not operational, but it introduces execution risk at unprecedented scale.

Score: 8/10 -- Exceptional revenue growth, margin expansion, and earnings trajectory, offset by FCF compression from the largest capex cycle in corporate history.