Amazon's Valuation

Hello everyone,

I cannot assess what would be realistic net margins for AWS.

Here is the beginning of my attempt to evaluate Amazon.

I would really appreciate your thoughts.


As per eMarketer, ecommerce should reach 10% of total retail worldwide sales in 2017 at $2.3T. They expect ecommerce to reach 14.5% of worldwide retail sales in 2020 to $4T. It is a 15% growth rate. If the growth rate decelerate to 12% from 2020 to 2027 we would reach $8T in ecommerce retail worldwide sales.

In 2016, net sales were as follow for Amazon:

North America $79,785 billion (Y/Y net sales growth 25%)
International $43,983 b (Y/Y net sales growth 24%)
AWS $12,219 b (Y/Y net sales growth 55%)


Retail consolidated sales (North America & International) were $123,768b. If growth decelerate to 20% for 2017 we would have consolidated sales of $148,521 billion or 6.5% of worldwide ecommerce retail sales.

If Amazon keeps a 6.5% of ecommerce worldwide retail sales we could have sales $520 billion by 2027 (6.5% of $8T) which would be a 13% growth rate. Big deceleration from the 2016 growth rate.


Gartner is predicting that the public cloud services market will grow 18% in 2017 to a total of $246.8 billion. Let’s assume that the public cloud services market can grow by 15% Y/Y until 2027. We would have almost a $1T market.

It is realistic to assume that AWS could reach $17 billion in sales for 2017. This would represent 7% of the worldwide public cloud services market.

If the cloud services market reach $1T by 2027 and AWS still represent 7% of this market, they could have $70 billion in revenues by then.

What would be realistic net margins for AWS?


I know this is off topic, but what caught my attention was “…from 2020 to 2027 we would reach $8T in ecommerce retail worldwide sales.”

What I found truly provocative about that is the enormous amount of garbage that will be generated by all the delivery and product packaging. We’ll have to ship the garbage to the moon or something, I don’t think there’s enough landfill area to dispose of it, even given higher rates of recycling.


We have to think of other ways of packing things.

E-commerce is and will still be a small portion of commerce even 10 years from now. Worldwide retail commerce (NOT ecommerce) is at approximately $24T right now, so we better find some solutions ASAP.

1 Like

Another big-picture issue like that is population. Birth rates have been falling to close to replacement level in much of the world, with a few exceptions here and there. At the same time, you could make a good argument that the human population is already beyond the earth’s carrying capacity, and will keep growing for years. (For instance, we mostly all know that carbon dioxide levels are quite high, but I only recently read a comment about the accompanying reduction in oxygen levels in the atmosphere.) This doesn’t seem to have been taken into account much in a lot of social commentary, and much less in investment analysis.

One possible consequence for my thinking is that money, as we currently know it, is too blunt an instrument, and is used way too indiscriminately to solve problems it can’t really solve. And it’s too often considered an end rather than a means.

I’ll get off my soapbox now. :slight_smile: