VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Monday, December 29, 2025
Amazon.com, Inc.
AMZN · NASDAQ
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Amazon combines a large commerce platform (Amazon Stores), a leading hyperscale cloud provider (AWS), and a retail media advertising business (Amazon Ads). Stores benefits from a two-sided marketplace network, dense fulfillment/delivery infrastructure, Prime bundling, and favorable working-capital dynamics that help fund scale. AWS competes in a hyperscaler oligopoly where capex/know-how and breadth of services matter, but share and pricing can be pressured by Azure and Google. Advertising monetizes high-intent shopping traffic; its durability depends on maintaining shopper engagement and navigating competition/regulation.
Primary segment
Amazon Stores (Retail, Marketplace, Prime Subscriptions)
Market structure
Oligopoly
Market share
39%-42% (estimated)
HHI: —
Coverage
4 segments · 6 tags
Updated 2025-12-29
Segments
Amazon Web Services (AWS)
Cloud infrastructure and platform services (IaaS/PaaS)
Revenue
16.9%
Structure
Oligopoly
Pricing
moderate
Share
28%-30% (reported)
Peers
Amazon Stores (Retail, Marketplace, Prime Subscriptions)
US retail ecommerce marketplace and online retail (integrated fulfillment + membership shipping)
Revenue
73.5%
Structure
Oligopoly
Pricing
moderate
Share
39%-42% (estimated)
Peers
Advertising Services (Amazon Ads / Retail Media)
US retail media digital advertising
Revenue
8.8%
Structure
Oligopoly
Pricing
strong
Share
74%-79% (estimated)
Peers
Other (healthcare, content licensing/distribution, shipping services, co-branded credit card agreements, etc.)
Adjacency bets and miscellaneous platform-linked services
Revenue
0.9%
Structure
Competitive
Pricing
weak
Share
—
Peers
—
Moat Claims
Amazon Web Services (AWS)
Cloud infrastructure and platform services (IaaS/PaaS)
Revenue_share based on FY2024 net sales (AWS) disclosed in Amazon's FY2024 Form 10-K.
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Hyperscale data center + networking footprint and sustained infrastructure spend create a high bar for new entrants and support cost/performance advantages.
Erosion risks
- Competitors match capex with aggressive pricing
- Power and chip supply constraints
Leading indicators
- AWS capex trend
- AWS operating margin trend
- Regional capacity and availability announcements
Counterarguments
- Azure and Google can fund comparable infrastructure at scale; differentiation may narrow over time.
Scope Economies
Supply
Scope Economies
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Breadth of services (compute, storage, database, analytics, ML, etc.) increases customer adoption across multiple services and improves platform stickiness.
Erosion risks
- Open-source and multi-cloud tooling reduces service differentiation
- Customers standardize on portable architectures
Leading indicators
- Service attach rate (customers using multiple AWS services)
- Net revenue retention for large accounts
Counterarguments
- Large customers increasingly design for multi-cloud, limiting single-provider scope advantages.
Long Term Contracts
Demand
Long Term Contracts
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Enterprise commitments (long-term contracts) can stabilize usage and pricing, reducing churn risk versus purely on-demand usage.
Erosion risks
- Repricing at renewal as hyperscalers compete
- Regulatory or sovereignty requirements drive regional alternatives
Leading indicators
- Remaining performance obligations / contracted backlog trend
- Customer concentration changes
Counterarguments
- Contracts can lock in lower pricing, limiting margin expansion; customers can still shift incremental workloads elsewhere.
Amazon Stores (Retail, Marketplace, Prime Subscriptions)
US retail ecommerce marketplace and online retail (integrated fulfillment + membership shipping)
Revenue_share is the sum of FY2024 net sales categories: Online stores + Physical stores + Third-party seller services + Subscription services (FY2024 Form 10-K).
Two Sided Network
Network
Two Sided Network
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Marketplace model links a large buyer base with third-party sellers; increasing selection and availability attracts more buyers, which in turn attracts more sellers.
Erosion risks
- Seller multi-homing across marketplaces
- Regulation limiting marketplace self-preferencing
Leading indicators
- Active seller count trend
- 3P unit mix / take-rate trend
- Customer repeat purchase frequency
Counterarguments
- Sellers increasingly build DTC channels (Shopify, social commerce) reducing dependence on Amazon.
Physical Network Density
Supply
Physical Network Density
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Dense fulfillment and delivery network enables fast shipping and supports both Amazon retail and Fulfillment by Amazon (FBA) for third-party sellers.
Erosion risks
- Last-mile cost inflation
- Labor constraints and unionization risk
- Competitors densify their own logistics networks
Leading indicators
- On-time delivery rates
- Cost per package trend
- Capex on fulfillment/transportation
Counterarguments
- Walmart and regional carriers can replicate parts of the network; speed advantage may narrow in major metros.
Suite Bundling
Demand
Suite Bundling
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Prime bundles shipping benefits with digital subscriptions, increasing retention and purchase frequency and making Amazon a default shopping destination.
Erosion risks
- Consumers churn if Prime price rises faster than perceived value
- Content costs increase without proportional engagement
Leading indicators
- Prime member growth / penetration
- Prime renewal rate
- Average orders per Prime member
Counterarguments
- Walmart+ and other memberships can offer similar shipping benefits; streaming has many substitutes.
Habit Default
Demand
Habit Default
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 2 evidence
Convenience + fast shipping reinforces habitual starting-point behavior for many routine purchases, especially for Prime members.
Erosion risks
- Low-price challengers shift bargain-seeking traffic
- Social commerce diverts discovery away from Amazon
Leading indicators
- Share of product searches starting on Amazon
- Order frequency trend
- Repeat customer rate
Counterarguments
- Product discovery is shifting to social/video platforms; default may weaken for discretionary categories.
Negative Working Capital
Financial
Negative Working Capital
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Rapid cash conversion cycle (collect from consumers before paying vendors/sellers) can fund growth and lower external financing needs.
Erosion risks
- Supplier terms tighten
- Higher inventory days from category mix or supply shocks
Leading indicators
- Cash conversion cycle trend
- Accounts payable days trend
- Inventory turnover trend
Counterarguments
- This benefit is common in large retail and marketplace models; not unique to Amazon.
Advertising Services (Amazon Ads / Retail Media)
US retail media digital advertising
Revenue_share based on FY2024 net sales category 'Advertising services' (FY2024 Form 10-K).
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Amazon controls high-intent on-site ad placements (sponsored ads, display, video) embedded in the shopping journey, making its inventory hard to replicate off-platform.
Erosion risks
- Regulatory limits on ad load or targeting
- Retailers expand competing retail media networks
Leading indicators
- Ad load / sponsored placement density
- Ads revenue growth vs retail GMV
- Advertiser ROI metrics
Counterarguments
- Brands can shift budgets to Google/Meta/TikTok if incremental ROI falls or measurement degrades.
Data Network Effects
Network
Data Network Effects
Strength: 4/5 · Durability: durable · Confidence: 3/5 · 1 evidence
Large shopper traffic and transaction data improve targeting and measurement, attracting more advertisers and reinforcing the ad business.
Erosion risks
- Privacy regulation limits use of first-party signals
- Measurement standards shift (incrementality requirements)
Leading indicators
- Retail media share trend vs Walmart/Target/Instacart
- Growth of non-endemic advertisers
- Regulatory actions on data use
Counterarguments
- Retail media is attracting many entrants; share can fragment as merchants diversify spend.
Other (healthcare, content licensing/distribution, shipping services, co-branded credit card agreements, etc.)
Adjacency bets and miscellaneous platform-linked services
Revenue_share based on FY2024 net sales category 'Other' (FY2024 Form 10-K).
Scope Economies
Supply
Scope Economies
Strength: 2/5 · Durability: medium · Confidence: 2/5 · 2 evidence
Small 'other' revenue streams can be launched and scaled by reusing Amazon's existing tech, logistics, and customer relationships, but moats vary widely by sub-business.
Erosion risks
- Sub-scale offerings fail to reach profitability
- Regulatory scrutiny in healthcare and finance
Leading indicators
- Materiality of 'Other' revenue over time
- Disclosure of major new initiatives or closures
Counterarguments
- Most adjacency categories are competitive and regulated; scale in retail/cloud doesn't guarantee leadership.
Evidence
10-K describes AWS being supported by large-scale technology infrastructure (servers, networking, data centers) and the ongoing costs to operate it at scale.
Their Q3 worldwide market shares were 29%, 20% and 13% respectively.
Provides AWS share (29%) for Q3 2025 cloud infrastructure services.
Americans shipped 22.37 billion parcels in 2024, with Amazon delivering 6.3 billion of them...
Illustrates Amazon delivery scale supporting fast shipping and network density.
Industry commentary emphasizes fast delivery as a key element of Amazon's value proposition supporting habitual usage.
Amazon will account for 40.4% of US retail ecommerce sales... this year.
Directly states an estimated US ecommerce market share.
Showing 5 of 6 sources.
Risks & Indicators
Erosion risks
- Competitors match capex with aggressive pricing
- Power and chip supply constraints
- Open-source and multi-cloud tooling reduces service differentiation
- Customers standardize on portable architectures
- Repricing at renewal as hyperscalers compete
- Regulatory or sovereignty requirements drive regional alternatives
Leading indicators
- AWS capex trend
- AWS operating margin trend
- Regional capacity and availability announcements
- Service attach rate (customers using multiple AWS services)
- Net revenue retention for large accounts
- Remaining performance obligations / contracted backlog trend
Curation & Accuracy
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