How Much Is Amazon Web Services Worth On A Standalone Basis?

by Trefis Team
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Amazon (NASDAQ:AMZN) breaks out its business into three segments:

  • North America: This segment generates revenue from retail sales of consumer products and subscriptions booked through North American stores.
  • International: This segment generates revenue from retail sales of consumer products and subscriptions booked through International stores (ex-North American stores).
  • Amazon Web Services (AWS): This segment houses revenue from global sales of compute, storage, database, and other service offerings. AWS is the world’s leading public cloud service.

AWS revenue is more profitable than retail sales for Amazon due to the operating leverage in the business. In fact, we estimate that AWS is worth nearly $400 billion on a standalone basis, as we show in our interactive dashboard analysis. You can modify any of the key drivers to visualize the impact of changes on the company’s valuation, and see all of our Technology company data here.

AWS’ revenue has grown at a CAGR of 53% over 2014-2018 to reach $25.6 billion in 2018 from $4.6 billion in 2014. While we expect this scorching pace of growth to cool down to a sub-40% level over the next few years, the operating leverage in the business is likely to help the EBITDA margin of AWS continue growing to reach 38% in 2019 from 36% in in 2018.

Given Amazon’s leadership position in the public cloud market and the favorable market dynamics, we expect the company to sustain and build upon its economies of scale despite competition from Microsoft Azure and Google Cloud.

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