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Morningstar Stock Analyst Report 02-07-2025

As of February 7, 2025, Amazon.com Inc's stock is priced at $238.83, with a fair value estimate of $240.00, indicating it is fairly valued. The company reported strong fourth-quarter results with a 10% revenue growth year-over-year, driven by its e-commerce and AWS segments, which are expected to continue to grow. However, regulatory concerns and challenges in penetrating new retail categories may pose risks to its future performance.

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Morningstar Stock Analyst Report 02-07-2025

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Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD

| Exchange: NASDAQ - ALL MARKETS Page 1 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Last Price Fair Value Estimate Price/FVE Market Cap Economic MoatTM Equity Style Box Uncertainty Capital Allocation ESG Risk Rating Assessment1
238.83 USD 240.00 USD 1.00 2.51 USD Tril Wide 2 Large Blend Medium Exemplary ;;;;;
6 Feb 2025 7 Feb 2025 06:46, UTC 6 Feb 2025 5 Feb 2025 06:00, UTC

Price vs. Fair Value

Fair Value: 240.00

7 Feb 2025 06:46, UTC
220
Last Close: 238.83
185 Overvalued
Undervalued
150

115

80
2020 2021 2022 2023 2024 YTD
Analysis
0.90 0.81 0.56 0.98 1.10 1.00 Price/Fair Value
76.26 2.38 -49.62 80.88 44.39 8.86 Total Return %
Morningstar Rating

Total Return % as of 06 Feb 2025. Last Close as of 06 Feb 2025. Fair Value as of 7 Feb 2025 06:46, UTC.
Contents
Analyst Note (7 Feb 2025) Amazon Earnings: Good Quarter With Reasonable Guidance
Business Description
Business Strategy & Outlook (7 Feb 2025) After Unusual Adjustments
Bulls Say / Bears Say (7 Feb 2025)
Analyst Note Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025
Economic Moat (1 May 2024)
Fair Value and Profit Drivers (7 Feb 2025) We are raising our fair value estimate for wide-moat Amazon to $240 per share from $200 after the
Risk and Uncertainty (2 Aug 2024) company reported strong fourth-quarter results. The firm’s first-quarter outlook was slightly better than
Capital Allocation (7 Feb 2025) we expected, despite including more than $2 billion of incremental currency pressure on revenue.
Analyst Notes Archive
Additionally, given the early returns on the profitability front from the ongoing network improvement
Financials
efforts, we modestly raised our profitability and working capital assumptions throughout our forecast
ESG Risk
Appendix period, which had a substantial impact on our valuation. When operating margins are relatively modest,
Research Methodology for Valuing Companies even small improvements are meaningful. We see shares as fairly valued, after a strong run since early
Important Disclosure
August.
The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of
Conduct Policy, Personal Security Trading Policy (or an equivalent of), and Retail demand trends have remained stable the last seven quarters, with e-commerce performing
Investment Research Policy. For information regarding conflicts of interest, please
visit: http://global.morningstar.com/equitydisclosures. reasonably well but still showing signs of consumer stress. Fourth-quarter revenue grew 10% year over
The primary analyst covering this company does not own its stock. year, as reported to $187.8 billion, compared with the top end of guidance at $188.5 billion. Currency
The ESG Risk Rating Assessment is a representation of Sustainalytics’ ESG Risk
1 was a $700 million greater headwind than anticipated. Relative to our estimates, online stores, physical
Rating.
stores, and AWS performed best, while third party seller services and advertising were slightly light.
The two key segments for long-term growth, AWS and advertising, expanded 19% and 18% year over
year, respectively, as reported. Amazon’s advertising growth continues to perform inline with or better
than large internet peers, while AWS' growth was strong and like Azure, is capacity constrained, so
investment will surge further in 2025.
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 2 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Sector Industry
Margins have been consistently stronger than anticipated over the past couple years, and we think
t Consumer Cyclical Internet Retail
there is room for expansion as the multi-hub strategy and increased use of robotics continue to unlock
Business Description
efficiencies. Fourth-quarter profitability was impressive, with operating profit at $21.2 billion, compared
Amazon is the leading online retailer and marketplace
for third party sellers. Retail related revenue represents with the high end of guidance at $20.0 billion. This resulted in an operating margin of 11.3%, compared
approximately 75% of total, followed by Amazon Web with 7.8% a year ago.
Services' cloud computing, storage, database, and other
offerings (15%), advertising services (5% to 10%), and Business Strategy & Outlook Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025
other the remainder. International segments constitute
25% to 30% of Amazon's non-AWS sales, led by Amazon dominates its served markets, notably for e-commerce and cloud services. It benefits from
Germany, the United Kingdom, and Japan. numerous competitive advantages and has emerged as the clear e-commerce leader given its size and
scale, which yield an unmatched selection of low-priced goods for consumers. The secular drift toward
e-commerce continues unabated with the firm continuing to grind out market share gains despite its
size. Prime ties Amazon’s e-commerce efforts together and provides a steady stream of high-margin
recurring revenue from customers who purchase more frequently from Amazon’s properties. In return,
consumers get one-day shipping on millions of items, exclusive video content, and other services, which
result in a powerful virtuous circle where customers and sellers attract one another. The Kindle and
other devices further bolster the ecosystem by helping attract new customers, while making the value
proposition irresistible in retaining existing users.

Through Amazon Web Services, or AWS, Amazon is also a clear leader in public cloud services.
Additionally, the company’s advertising business is already large and continues to scale as ads have
made their way into Amazon’s streaming outlets, thus offering an attractive option for marketers looking
to access a vast audience with a variety of proprietary data points about those very consumers. AWS
and advertising growth should continue to outpace e-commerce growth and should be the main growth
drivers over the next five years. This is critical, as each of these segments drives higher margins than the
corporate average, which in turn should allow both operating profit and EPS to outgrow revenue as
margins continue to expand.

From a retail perspective, we expect continued innovation to help drive further share gains in a post-
lockdown world. We also look for continued penetration into categories such as groceries and luxury
goods that have not previously translated into the same level of success as other retail categories. We
see technology advancements in AWS and a bigger push to service enterprise customers as helping to
maintain the company’s lead there. Overall, we see good revenue and free cash flow growth for years to
come.

Bulls Say Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025
u Amazon is the clear leader in e-commerce and enjoys unrivaled scale to continue to invest in growth
opportunities and drive the very best customer experience.

© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 3 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Competitors
Amazon.com Inc AMZN Microsoft Corp MSFT Walmart Inc WMT eBay Inc EBAY

Fair Value Fair Value Last Close

Last Close
240.00 490.00 102.85 67.50
Uncertainty : Medium Uncertainty : Medium
Last Close Fair Value Fair Value
238.83 Last Close 58.00 59.00
415.82 Uncertainty : Medium Uncertainty : High

Analysis
Economic Moat Security
Wide 1 Security
Wide 2 Security
Wide 3 Security
Narrow 4
Currency USD USD USD USD
Fair Value 240.00 7 Feb 2025 06:46, UTC 490.00 31 Jul 2024 06:07, UTC 58.00 21 Nov 2024 00:44, UTC 59.00 4 Nov 2024 21:55, UTC
1-Star Price 324.00 661.50 78.30 91.45
5-Star Price 168.00 343.00 40.60 35.40
Assessment Overvalued 6 Feb 2025 Undervalued 6 Feb 2025 Overvalued 6 Feb 2025 Fairly Valued 6 Feb 2025
Morningstar Rating QQQ7 Feb 2025 06:51, UTC QQQQ6 Feb 2025 22:33, UTC Q6 Feb 2025 22:33, UTC QQQ6 Feb 2025 22:33, UTC
Analyst Dan Romanoff, Senior Equity Analyst Dan Romanoff, Senior Equity Analyst Noah Rohr, Equity Analyst Sean Dunlop, Senior Equity Analyst
Capital Allocation Exemplary Exemplary Standard Standard
Price/Fair Value 1.00 0.85 1.77 1.14
Price/Sales 4.01 11.87 1.23 3.36
Price/Book 8.85 10.21 9.38 6.00
Price/Earning 43.19 33.19 42.50 21.02
Dividend Yield 0.00% 0.74% 0.81% 1.60%
Market Cap 2,511.30 Bil 3,091.20 Bil 826.23 Bil 32.33 Bil
52-Week Range 151.61—242.52 385.58—468.35 55.85—103.02 40.74—71.52
Investment Style Large Blend Large Blend Large Blend Mid Blend

u High-margin advertising and AWS are growing faster than the corporate average, which should
continue to boost profitability over the next several years.
u Amazon Prime memberships help attract and retain customers who spend more with Amazon; this
reinforces a powerful network effect while bringing in recurring and high-margin revenue.

Bears Say Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025
u Regulatory concerns are rising for large technology firms, including Amazon. Further, the firm may face
increasing regulatory and compliance issues as it expands internationally.
u New investments, notably in fulfillment, delivery, and AWS, should damp free cash flow growth. Also,
Amazon’s penetration into some countries might be harder than in the US due to inferior logistic
networks.
u Amazon may not be as successful in penetrating new retail categories, such as luxury goods, due to
consumer preferences and an improved e-commerce experience from larger retailers.
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 4 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Economic Moat Dan Romanoff, CPA, Senior Equity Analyst, 1 May 2024

We assign a wide moat rating to Amazon based on network effects, cost advantages, intangible assets,
and switching costs. Amazon has been disrupting the traditional retail industry for more than two
decades while also emerging as the leading infrastructure-as-a-service provider via Amazon Web
Services. This disruption has been embraced by consumers and has driven change across the entire
industry as traditional retailers have invested heavily in technology in order to keep pace. Covid-19 has
accelerated change, and given the company's technological prowess, massive scale, and relationship
with consumers, we think Amazon has widened its lead, which we believe will result in economic
returns well in excess of its cost of capital for years to come.

We believe Amazon’s retail business has a wide moat stemming from network effects associated with
its marketplace, where more buyers and sellers continually attract more buyers and sellers; a cost
advantage tied to purchasing power, logistics, vertical integration (proprietary brands, owned delivery,
and so on), and a negative cash conversion cycle; and intangible assets associated with technology and
branding. We also believe AWS is a wide-moat business, thanks to high customer switching costs; a
cost advantage associated with economies of scale where few competitors can keep up with Amazon’s
investment pace; intangible assets arising from semiconductor and facility development; and a network
effect associated with a marketplace for software created to make AWS work better. We also would
assign Amazon’s burgeoning advertising business a narrow moat based on intangible assets from its
proprietary data on hundreds of millions of users and a network effect again focusing on buyers and
sellers meeting in the largest available venues. We believe that the wide moat for Amazon’s entire
business is greater than the sum of its parts; we prefer to analyze Amazon’s moat on the whole, as the
company's segments reinforce one another and returns result in an unrivaled consumer experience.

Together, we believe Amazon’s retail business enjoys a wide moat supported by cost advantages,
intangible assets, and network effects. We assess the moat around Amazon’s retail business based on a
combination of online stores, third-party seller services, subscription services, and physical stores, as we
find it challenging to think about durable competitive advantages for each of these segments in
isolation. Given its massive scale, Amazon has created cost advantages including buying power,
economies of scope, route density, and research and development. From a total gross merchandise
value perspective, with approximately $580 billion in 2021, it finally surpassed Walmart. Similarly,
Amazon is the largest online retailer and is an order of magnitude larger than Walmart and 4 times
larger than Shopify, assuming we classify Shopify as a demand aggregator. Additionally, the company
has become more vertically integrated over time and most recently has built out its own transportation
network. Size dictates certain scales of efficiency, but we think Amazon is the definition of operational
excellence.

These advantages are related and reinforce one another in a virtuous circle. Low prices and an
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

unmatched selection have come to define the company in consumer’s minds, giving rise to intangible
assets from branding and technology (search capabilities and recommendation engine). Product
searches are more likely to begin on Amazon at this point than they are Google. Amazon has become
the only demand aggregator at scale in the US because of its wide selection, intelligent
recommendation algorithms, low prices, and convenience, which combine into a powerful business
model.

We also believe Amazon’s retail business benefits from network effects. The sheer number of
consumers shopping on Amazon makes it attractive to third party sellers, while the marketplace
expands the selection available to shoppers and makes Amazon a more attractive online destination for
consumers. In fact, 50%-55% of total goods sold by Amazon are through its third-party marketplace. At
the heart of third-party seller services is the commission Amazon collects from the independent seller.
However, these services also include Fulfillment by Amazon, distribution facility storage, shipping,
payment processing, and other related items.

To improve the consumer experience and more tightly tie users to Amazon, the company has moved
increasingly into content. Consumers can now have Prime Video, Music Unlimited, Kindle Unlimited,
Prime Gaming, and other similar subscription services. The company even produces original content for
Prime Video to help reinforce the notion that consumers can get anything they need from Amazon. We
view the Kindle, Echo, Fire, and other Amazon original devices as interesting on their own merits, but
think the underlying point is to once again draw in more consumers to Amazon’s retail properties and
engage those customers that are already within the ecosystem. Amazon’s hardware helps to enable
Amazon’s services. The Kindle, for example, dovetails perfectly with Kindle Unlimited, which for a $9.99
monthly subscription, allows users to read from a selection of more than one million book titles. The
company even offers a direct-to-Kindle book publishing service.

The common thread that weaves throughout Amazon’s retail business is Amazon Prime, which for $139
per year allows users unlimited free shipping on millions of stock-keeping units, including same-day or
one-day shipping on many items, access to Prime Video and Prime Music, and a variety of other
benefits. We view Prime subscriptions and the differentiated user experience they offer as critical to
attracting and retaining customers. Prime memberships generate high cash flow that can be reinvested
in further improving the user experience on the technology, content, and delivery fronts. Prime
customers are very sticky and tend to purchase from Amazon more frequently and across more retail
categories. We think content combined with Prime subscriptions actually build a switching cost that
consumers would need to overcome, although these switching costs might not last for decades in order
to warrant it as a moat source.

Advertising is tangentially related to Amazon’s retail operations in that it takes place on Amazon’s own
online properties. Advertising is growing rapidly and is likely the segment with the highest operating
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 6 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

margins in Amazon’s portfolio, likely in excess of 30%, which is would be directionally comparable to
margins earned by Facebook when it was a similarly sized business (other was $21 billion in revenue in
2020, compared with $18 billion in revenue for Facebook in 2015). We believe advertising dollars flow to
where the eyeballs are and where information is known about the online user, which fits in very well
with Amazon’s strengths. We therefore expect advertising to grow rapidly over the next several years
and continue to boost the company’s overall profitability.

Looking at advertising in isolation, we would likely give it a narrow moat rating based on intangible
assets arising from proprietary technology (data), and network effects, although assigning a moat rating
here is difficult because Amazon doesn’t disclose much about this business. That said, we can see
Amazon’s advertising becoming a wide-moat business as it becomes more established and more details
are disclosed. We think Amazon’s advertising business is attractive to advertisers because there is
proprietary information about the consumers and real-time data about when they are searching for a
particular product, and Amazon already enjoys substantial traffic. We expect this business to continue
to grow rapidly and offer an attractive alternative to platforms from social network and internet search
providers.

Amazon Web Services enjoys a wide moat supported by switching costs, network effects, intangible
assets, and cost advantages. Amazon was a pioneer in public cloud infrastructure as a service and
platform as a service and retains a substantial lead over its closest rival, Microsoft. AWS has driven
profitability for the entire company; although it represents 10%-15% of revenue, it generates 60%-65%
of total operating profit dollars for Amazon. We also expect AWS to remain a key growth driver for the
company over the next decade.

AWS differs from the company’s e-commerce operations in that it is enterprise-facing rather than
consumer-facing. Enterprise customers rely on AWS for core IT infrastructure, which represents
significant switching costs in terms of the time and expense of integrating applications with core
software elements, such as the database, and dedicates a user to a specific set of software
development tools. Ultimately, the operational risks to changing mission-critical technology
infrastructure is high, which is why core elements such as ERP systems and cloud providers are rarely
changed.

Further, we believe it is cheaper initially for companies to move workloads to the cloud, as there are
fewer upfront costs and a lower bar to clear for maintenance and administration. Additionally, Amazon
has devoted significant R&D resources to adding advanced features to the platform. Along those lines,
AWS offers scale advantages to clients in that it is cheaper and faster to set up IT infrastructure in the
cloud compared with undertaking the same effort independently. Customers also benefit from the ability
to scale up compute power for burst requirements, paying for only what they need and having it
available effectively on-demand. We have seen some of the largest technology companies in the world
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

simply fail to keep pace with Amazon’s massive investments in IaaS over the years, and AWS’ cost
advantage over its rivals is obvious. Those firms struggle to compete in a meaningful way against AWS.

Amazon has amassed significant technology and process knowledge, which we believe is an intangible
asset for the firm as a whole and also for AWS. These assets could also apply to the logistics aspect of
the retail business. The company expanded its distribution network by roughly 50% in 2020 while
managing through a global pandemic. Given the size of its footprint, this is a monumental achievement
and speaks to the company’s ability to quickly plan, construct, and expand facilities based on specific
needs. The knowledge base to quickly and efficiently bring massive server farms online for AWS is
similarly impressive and only comes from the experience of previously building hyperscale data centers.
Additionally, the firm designs its own semiconductors, which are used to power its server arrays, and
also developed proprietary robotic automation technology used in its fulfillment centers.

As with other large software companies, we see a network effect within AWS’ ecosystem for third-party
software, although we view this as more of secondary moat source. The large ecosystem of AWS users
has benefited from the software development efforts of those same users, as they turn around and offer
applications written on AWS for AWS users. Thus, users help attract other users to AWS. We see
Microsoft and Salesforce in particular as the best comparable examples in software of creating network
effects.

We think network effects, intangible assets, cost advantages, and switching combine to form a
powerful moat for all of Amazon. We think many of these areas reinforce one another and see little
difficulty in Amazon continuing to deliver returns on invested capital well in excess of its cost of capital
over the long term.

Fair Value and Profit Drivers Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025

Our fair value estimate for Amazon is $240 per share, which implies a 2025 enterprise value to sales
multiple of 4 times and a 2% free cash flow yield.

Over the long term, we expect e-commerce to continue to take share from brick-and-mortar retailers.
We further expect Amazon to gain share online. We believe that over the medium term, covid pulled
forward some demand by changing consumer behavior and better penetrating some retail categories,
such as groceries, pharmacy, and luxury goods, that previously had not gained as much traction online.
We think Prime subscriptions and the accompanying benefits, combined with selection, price, and
convenience continue to drive the retail story. We also see international as being a longer-term
opportunity within retail. We model total retail-related revenue growing at an 8% compound annual
growth rate (CAGR) over the next five years.

We believe the critical growth drivers over the medium term will be AWS and advertising. Since these
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

segments earn materially higher margins than the rest of the business, we also expect them to drive
margins higher over time. Over the next five years, we project AWS revenue growing at a 16% CAGR
and advertising revenue growing at a 17% CAGR. In total, Amazon should grow at an 10% CAGR
through 2028. We model GAAP operating margin expanding from 11% (actual) in 2024 to approximately
13% in 2029 as the company grows into its expanded footprint and optimizes its substantial investment
in delivery.

Risk and Uncertainty Dan Romanoff, CPA, Senior Equity Analyst, 2 Aug 2024

We assign Amazon a Morningstar Uncertainty Rating of Medium.

Amazon must protect its leading online retailing position, which can be challenging as consumer
preferences change, especially post-covid-19 (as consumers may revert to prior behaviors), and
traditional retailers bolster their online presence. Maintaining an e-commerce edge has pushed the
company to make investments in nontraditional areas, such as producing content for Prime Video and
building out its own transportation network. Similarly, the company must also maintain an attractive
value proposition for its third-party sellers. Some of these investment areas have raised investor
questions in the past, and we expect management to continue to invest according to its strategy,
despite periodic margin pressure from increased spending.

The company must also continue to invest in new offerings. AWS, transportation, and physical stores
(both Amazon branded and Whole Foods) are three notable areas of investment. These decisions require
capital allocation and management focus and may play out over a period of years rather than quarters.

Continued international expansion will likely require similar investment and management attention but
will also increase exposure to different regulatory environments. Some countries have instituted or may
institute protectionist policies. Even domestically over the last several years, lawmakers from both
parties have increasingly focused on the amount of market power large technology companies have
accrued. Antitrust, data privacy, and section 230 have been repeatedly invoked.

From an environmental, social, and governance perspective, data breaches and service outages are a
concern for any type of cloud service provider. As a retailer, Amazon has personal information for
hundreds of millions of consumers around the world, while AWS hosts proprietary mission-critical data
for enterprises.

Capital Allocation Dan Romanoff, CPA, Senior Equity Analyst, 7 Feb 2025

We assign Amazon an Exemplary Capital Allocation Rating. The rating reflects our assessments of a
sound balance sheet, exceptional investments, and appropriate shareholder distributions. We think
investments back into the business are most likely to be the key driver of total shareholder returns and
are therefore appropriately prioritized over other capital returns such as dividends and buybacks, which
Amazon does not offer. The company regularly makes small tuck-in acquisitions, which we view as
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

immaterial to the company’s financials.

The balance sheet is sound, with a substantial net cash position. We expect the balance sheet to
remain solid as the company has typically maintained a conservative position and has historically
generated substantial free cash flow from AWS and advertising to fund growth throughout the
business.

Management’s track record of investing in areas that investors were initially skeptical of but were
ultimately vindicated has been remarkable. Chairman and CEO Jeff Bezos founded the company in 1994
and has led the company until he stepped down in 2021 but remains on the board of directors. He has
been succeeded by Andy Jassy, former CEO of AWS. We note Mr. Bezos remains actively involved with
the company as the executive chairman of the board, and that Mr. Jassy has been at the company for
23 years and was a driving force behind the foundation and growth of AWS. We think Mr. Jassy has
managed the company through a very challenging period involving covid, and now faces a surge in
generative AI demand, which carries a new set of challenges that we believe he is well suited to
handle. Ultimately, we assess the overall investment track record as exceptional.

Analyst Notes Archive

DeepSeek's R1 Launch Shows There Are No Moats in Large Language Model Space Malik Ahmed
Khan, CFA,Equity Analyst,27 Jan 2025

DeepSeek, a Chinese artificial intelligence company, released its open-source reasoning model, R1,
earlier this month. The model's capabilities roughly match those of advanced models by OpenAI,
Anthropic, and Google while having materially lower training costs. Why it matters: R1's impressive
performance/cost dynamics have raised investor concerns about the necessity of the billions of dollars
of capital expenditures by large US tech companies so far and the billions more they are planning to
spend on generative AI in the coming years. R1's launch and the dramatically lower pricing, which is
more than 90% below OpenAI's latest reasoning model, go hand-in-hand with our broader
"commodification of complements" view of the large language model space. We believe that as the
price of LLMs (the complementary good) goes down, the value and usage of the public cloud vendors'
primary good, cloud infrastructure, actually increases. To that end, we believe Amazon, Microsoft, and
Google actually benefit from reduced LLM pricing in the long run. The bottom line: We maintain our fair
value estimates for Microsoft ($490), Amazon ($200), and Alphabet ($220) and see these wide-moat
firms benefiting from a commodified LLM layer, with increased spending on AI creating tailwinds for
their public cloud businesses. While we expect capital expenditures by the public cloud vendors to
remain elevated in the near term, we see these expenditures as primarily geared toward serving
generative AI demand, which should flourish with lower pricing of LLMs, as opposed to training leading-
edge models. At the same time, we expect these large US tech companies to replicate some of the AI
techniques that DeepSeek leveraged to drive the cost of R1 down, as a means of reducing their own
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

model training and inference costs, potentially lowering medium- to long-term capital expenditures.

Amazon: Teamsters Strike Unlikely to Have Meaningful Impact Dan Romanoff, CPA,Senior Equity
Analyst,19 Dec 2024

We do not expect a material impact on Amazon’s e-commerce operations after thousands of workers
went on strike on Dec. 19. The shares are up modestly intraday, reinforcing the notion that this is not
likely to have a negative impact. Amazon continues to drive efficiencies throughout its network, which
helps lower costs and improve delivery speeds and ultimately drives increased purchases by Prime
members. Our fair value estimate remains at $200, leaving the shares overvalued, in our view. Shares of
nearly all companies in our narrow software coverage have been extremely strong since September on
expectations for interest-rate cuts by the Federal Reserve. Fundamentals have not changed. While we
have not changed our discount rate, a 100-basis-point reduction would result in a fair value estimate
increase of at least 20%.At the time of writing, the strike involved seven facilities in New York,
California, Illinois, and Georgia. We view this as part of a long-running dispute between Amazon and
the Teamsters Union, which seemingly chose the days leading up to Christmas to strike to inflict
maximum discomfort on consumers. Amazon employs more than 1.5 million people globally, the vast
majority of whom are involved in warehouse and delivery. Approximately 1% are represented by unions.
Amazon increased wages for warehouse and delivery employees in September by about 7%. These
employees are eligible for typical benefits, including healthcare and 401(k) plans.The company does not
recognize the Teamsters Union as representing any Amazon workers. The Teamsters have been trying to
unionize Amazon for years. Amazon has objected to at least one successful unionization vote in the US,
alleging National Labor Relations Board bias, and also sued in federal court to challenge the
constitutionality of the NLRB itself. We think unionization is generally bad for the firm, as it tends to
increase wages and reduce efficiency.

Amazon Earnings: AWS and Margins Shine Brightest in a Quarter With Many Bright Spots Dan
Romanoff, CPA,Senior Equity Analyst,1 Nov 2024

We are raising our fair value estimate for wide-moat Amazon to $200 per share from $195 after the
company reported solid third-quarter results. The firm’s fourth-quarter outlook was generally aligned
with our estimates. Changes to our model are minor but center around continued near-term profitability
improvements. Overall results are pretty consistent with recent quarters. Amazon continues to gain
efficiencies throughout the network, which helps lower costs and improve delivery speeds and
ultimately drives increased purchases by Prime members. We now see shares as fairly valued, after a
strong run since early August.Retail demand trends remain unchanged over the last 18 months, with e-
commerce performing well but showing signs of consumer stress. Third-quarter revenue grew 11% year
over year, as reported to $158.9 billion, compared with the top end of guidance at $158.5 billion.
Relative to our estimates, online stores, subscription services, and AWS performed best, while third-
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

party seller services and advertising modestly lagged. The two key segments for long-term growth, AWS
and advertising, both expanded 19% year over year, as reported. Amazon’s advertising growth
continues to outpace its large internet peers, while AWS' growth accelerated sequentially for the fifth
straight quarter.Margins have been consistently stronger than anticipated over the past year or two,
and we continue to believe there is room for expansion as the multihub strategy continues to unlock
efficiencies. Third-quarter profitability was outstanding, with operating profit at $17.4 billion, compared
with the high end of guidance at $15.0 billion. This resulted in an operating margin of 11.0%, compared
with 7.8% a year ago. Management’s long-term goal is to have international operating margins equal to
North American margins. International posted positive operating profits for the third straight quarter,
which is a positive indicator in our view. AWS profitability was very strong.

Amazon Earnings: AWS Continues to Accelerate While Overall Margins Strength Persists Dan
Romanoff, CPA,Senior Equity Analyst,2 Aug 2024

We are raising our fair value estimate for wide-moat Amazon to $195 per share from $193 after the
company reported solid second-quarter results. The company’s third-quarter outlook aligned with our
revenue estimate and was better than our operating income estimate. Changes to our model are modest
but center around continued profitability enhancements in the near term. Amazon continues to take
strides in efficiency improvements throughout the network, which helps lower costs and improve
delivery speeds and ultimately drives increased purchases by prime members. After a pullback that
began in early July, we see shares as increasingly attractive.Overall demand trends remain unchanged
over the last year or so, with e-commerce showing signs of consumer stress. Second-quarter revenue
grew 10% year-over-year as reported, or 11% in constant currency, to $148.0 billion, compared with the
guidance mid-point of $146.5 billion. Relative to our estimates, online stores and third-party seller
services drove most of the miss, while all segments were slightly light. Amazon Web Services was nicely
ahead of our model. The two key segments for long-term growth, AWS and advertising, increased 19%
and 20% year over year, as reported, respectively. Amazon’s advertising growth continues to outpace its
large internet peers, while AWS' growth accelerated sequentially for the fourth straight quarter.Margins
have been consistently stronger than anticipated over the past year, and we continue to believe there is
room for expansion as the multihub strategy continues to unlock efficiencies. Second-quarter
profitability was impressive, with operating profit at $14.7 billion, compared with the high end of
guidance at $14.0 billion. This resulted in an operating margin of 9.9%, compared with 5.7% a year ago.
The international unit generated positive operating profits for the second straight quarter, which we
think is a harbinger for longer-term expansion.

Amazon Earnings: AWS Accelerates and Margins Continue to Outperform Dan Romanoff, CPA,Senior
Equity Analyst,1 May 2024

We are raising our fair value estimate for wide-moat Amazon to $193 per share from $185 previously,
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

after it reported good first-quarter results. The company’s second-quarter outlook was shy of our
aggressive estimates, while it noted plans to materially increase data center investments in 2024 to
meet generative AI demand. Changes to our model are modest but center around continued profitability
enhancements. Many positive trends from the last several quarters continued with notable
improvement in AWS demand and additional cost savings arising from fulfillment and cost to serve.
Strong quarterly performance has pushed the shares meaningfully higher over the last year, and as
such, we see only a modest upside to our fair value for investors.Overall demand continues to trend
favorably across business units. First-quarter revenue grew 13% year-over-year as reported and 13% in
constant currency and came in at $143.3 billion, compared with the high end of guidance at $143.5
billion. Relative to our estimates, most of the upside was derived from online stores, advertising, and
Amazon Web Services while physical stores, third-party seller services, subscriptions, and other were
generally in line. The two key segments, AWS and advertising, increased 17% and 24%, as reported,
respectively, over the year-ago period. Amazon’s advertising growth has bested its large internet peers
over the last year or so, while AWS' growth accelerated both year over year and sequentially.Margins
remain a bright spot, and we continue to believe there is room for expansion. First-quarter profitability
was impressive, with operating profit at a best-ever $15.3 billion, compared with the high end of
guidance at $12.0 billion. This resulted in an operating margin of 10.7%, compared with 3.7% a year
ago. Even the international business generated positive operating profits for the first time in more than
two years, which bodes well for the long term.

Amazon Earnings: Advertising Shines, E-Commerce Is Still Improving, and Margins Are Impressive
Dan Romanoff, CPA,Senior Equity Analyst,2 Feb 2024

Wide-moat Amazon reported strong fourth-quarter results and offered a mixed outlook relative to our
expectations, including in-line revenue and better profitability. Improvements in fulfillment and cost to
serve continue to drive stronger-than-anticipated profitability in retail. Segment results were good
overall, with advertising coming in the strongest relative to our model. After several quarters of strong
performance on the profitability front, we are raising our operating margin outlook by 160 basis points
for 2024 and similar margin expansion over the next several years. In turn, we raise our fair value
estimate to $185 from $155. After a strong run in the shares over the last year, we see the stock as fairly
valued.We continue to see positive developments on the demand front on multiple vectors. Fourth-
quarter revenue accelerated to 14% year-over-year growth as reported and 13% in constant currency,
and came in at $170.0 billion, compared with the high end of guidance at $167.0 billion. The two key
segments, Amazon Web Services, or AWS, and advertising, grew 13% and 27% as reported,
respectively, over the year-ago period. Amazon’s advertising growth continues to outpace that of its
large internet peers, albeit off of a smaller revenue base. Relative to our model, online stores, third-party
seller services, or 3P, and advertising drove the vast majority of upside—consistent with last quarter.
Subscription services were ahead, AWS and other were in line, and physical stores were slightly shy of
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

our assumptions.Margins were good across segments and we continue to believe there is room for
further improvements. Profitability was impressive, with operating profit coming in at $13.2 billion,
compared with the high end of guidance at $12.0 billion, resulting in an operating margin of 7.8%,
compared with 1.8% a year ago, and representing the best fourth quarter in at least a decade. K

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Competitors Price vs. Fair Value

Microsoft Corp MSFT

Fair Value: 490.00

31 Jul 2024 06:07, UTC
436
Last Close: 415.82
366 Overvalued
Undervalued
296

226

156
2020 2021 2022 2023 2024 YTD
0.95 0.97 0.75 1.02 0.86 0.85 Price/Fair Value
42.37 52.24 -27.94 57.96 12.91 -1.35 Total Return %
Morningstar Rating

Total Return % as of 06 Feb 2025. Last Close as of 06 Feb 2025. Fair Value as of 31 Jul 2024 06:07, UTC.

Walmart Inc WMT

Last Close: 102.85

88 Fair Value: 58.00
21 Nov 2024 00:44, UTC

73 Overvalued
Undervalued
58

28
2020 2021 2022 2023 2024 YTD
1.16 1.00 1.02 1.07 1.56 1.77 Price/Fair Value
23.12 1.90 -0.46 12.79 73.51 13.84 Total Return %
Morningstar Rating

Total Return % as of 06 Feb 2025. Last Close as of 06 Feb 2025. Fair Value as of 21 Nov 2024 00:44, UTC.

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Competitors Price vs. Fair Value

eBay Inc EBAY

Last Close: 67.50

84 Fair Value: 59.00
4 Nov 2024 21:55, UTC

69 Overvalued
Undervalued
54

24
2020 2021 2022 2023 2024 YTD
0.91 0.92 0.69 0.89 1.05 1.14 Price/Fair Value
40.93 33.77 -36.32 7.60 44.50 8.96 Total Return %
Morningstar Rating

Total Return % as of 06 Feb 2025. Last Close as of 06 Feb 2025. Fair Value as of 4 Nov 2024 21:55, UTC.

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Morningstar Historical Summary

Financials as of 30 Sep 2024
Fiscal Year, ends 31 Dec 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD TTM
Revenue (USD K) 107,006,000135,987,000177,866,000232,887,000280,522,000386,064,000469,822,000513,983,000574,785,000 —450,167,000620,128,000
Revenue Growth % 20.3 27.1 30.8 30.9 20.5 37.6 21.7 9.4 11.8 — 11.2 11.9
EBITDA (USD K) 8,308,000 12,492,000 16,132,000 28,019,000 37,365,000 51,005,000 74,393,000 38,352,000 89,402,000 — 85,265,000113,484,000
EBITDA Margin % 7.8 9.2 9.1 12.0 13.3 13.2 15.8 7.5 15.6 — 18.9 18.3
Operating Income (USD K) 2,233,000 4,186,000 4,106,000 12,421,000 14,541,000 22,899,000 24,879,000 12,248,000 36,852,000 — 47,390,000 60,599,000
Operating Margin % 2.1 3.1 2.3 5.3 5.2 5.9 5.3 2.4 6.4 — 10.5 9.8
Net Income (USD K) 596,000 2,371,000 3,033,000 10,073,000 11,588,000 21,331,000 33,364,000 -2,722,000 30,425,000 — 39,244,000 49,868,000
Net Margin % 0.6 1.7 1.7 4.3 4.1 5.5 7.1 -0.5 5.3 — 8.7 8.0
Diluted Shares Outstanding (K) 9,540,000 9,680,000 9,860,000 10,000,000 10,080,000 10,198,000 10,296,000 10,189,000 10,492,000 — 10,705,000 10,681,750
Diluted Earnings Per Share (USD) 0.06 0.25 0.31 1.01 1.15 2.09 3.24 -0.27 2.90 — 3.67 4.68
Dividends Per Share (USD) — — — — — — — — — — — —

Valuation as of 31 Jan 2025

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Recent Qtr TTM
Price/Sales 3.2 2.8 3.6 3.4 3.5 4.8 3.7 1.7 2.9 3.8 3.8 4.1
Price/Earnings 909.1 172.4 Years
294.1 84.0 82.0 95.2 65.4 76.3 79.4 46.9 46.9 50.8
Price/Cash Flow 32.6 24.8 35.3 28.1 26.2 29.9 31.3 21.6 22.0 20.8 20.8 22.5
Dividend Yield % — — — — — — — — — — — —
Price/Book 25.6 20.1 22.9 18.8 16.3 19.8 14.1 6.3 8.6 9.0 9.0 9.7
EV/EBITDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating Performance / Profitability as of 30 Sep 2024
Fiscal Year, ends 31 Dec 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD TTM
ROA % 1.0 3.2 2.8 6.9 6.0 7.8 9.0 -0.6 6.1 — — 9.3
ROE % 4.9 14.5 12.9 28.3 22.0 27.4 28.8 -1.9 17.5 — — 22.6
ROIC % 3.3 8.4 7.1 15.4 12.1 14.7 16.0 -0.6 9.8 — — 13.6
Asset Turnover 1.8 1.8 1.7 1.6 1.4 1.4 1.3 1.2 1.2 — — 1.2
Financial Leverage
Fiscal Year, ends 31 Dec 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Recent Qtr TTM
Debt/Capital % 51.4 44.1 57.8 43.2 50.5 47.5 45.7 49.0 40.2 — 34.2 —
Equity/Assets % 20.7 23.1 21.1 26.8 27.6 29.1 32.9 31.6 38.2 — 44.3 —
Total Debt/EBITDA 1.7 1.2 2.4 1.2 1.7 1.7 1.6 3.7 1.5 — 1.6 —
EBITDA/Interest Expense 18.1 25.8 19.0 19.8 23.4 31.0 41.1 16.3 28.1 Infinite 46.4 44.5

Morningstar Analyst Historical/Forecast Summary as of 06 Feb 2025

Financials Estimates Forward Valuation Estimates
2023 2024 2025 2026 2027
Fiscal Year, ends 31 Dec 2024 2023 2024 2025 2026 2027
Price/Sales 1.5 2.5 3.6 3.2 2.9
Revenue (USD Mil) 574,785 637,959 701,594 774,982 857,617 Price/Earnings 52.4 39.7 38.8 34.0 30.9
Revenue Growth % 11.8 11.0 10.0 10.5 10.7 Price/Cash Flow — — — — —
EBITDA (USD Mil) 85,515 155,941 168,415 214,388 218,178 Dividend Yield % — — — — —
EBITDA Margin % 14.9 24.4 24.0 27.7 25.4 Price/Book 7.9 8.2 7.3 6.1 5.1
EV/EBITDA 10.8 10.5 15.1 11.9 11.6
Operating Income (USD Mil) 36,852 68,593 81,066 93,491 104,972
Operating Margin % 6.4 10.8 11.6 12.1 12.2
Net Income (USD Mil) 30,425 59,248 66,814 76,919 84,825
Net Margin % 5.3 9.3 9.5 9.9 9.9
Diluted Shares Outstanding (Bil) 10 11 11 11 11
Diluted Earnings Per Share(USD) 2.90 5.53 6.16 7.02 7.74
Dividends Per Share(USD) 0.00 0.00 0.00 0.00 0.00

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

ESG Risk Rating Breakdown

Exposure Subject Subindustry (38.0) u Exposure represents a company’s vulnerability to ESG

Company Exposure1 39.2 risks driven by their business model
39.2
u Exposure is assessed at the Subindustry level and then
– Manageable Risk 36.0 Medium
2 0 55+ specified at the company level
Unmanageable Risk 3.2 u Scoring ranges from 0-55+ with categories of low, me-
Low Medium High
dium, and high-risk exposure

Management
u Management measures a company ’s ability to manage
Manageable Risk 36.0 ESG risks through its commitments and actions
36.4%
– Managed Risk3 13.1 Average
u Management assesses a company's efficiency on ESG

Management Gap4 22.9 100 0 programs, practices, and policies

Strong Average Weak u Management score ranges from 0-100% showing how

Overall Unmanaged Risk 26.1 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

26.10
Medium

Negligible Low Medium High Severe ESG Risk Rating is of Feb 05, 2025. Highest Controversy Level is as of Jan 08,
2025. Sustainalytics Subindustry: Online and Direct Marketing Retail.
ESG Risk Ratings measure the degree to which a company’s value is impacted by environmental, social, and governance Sustainalytics provides Morningstar with company ESG ratings and metrics
risks, by evaluating the company’s ability to manage the ESG risks it faces. on a monthly basis and as such, the ratings in Morningstar may not
necessarily reflect current Sustainalytics’ scores for the company. For the
1. A company's Exposure to material ESG issues 2. Unmanageable Risk refers to risks that are inherent to a particular business model that cannot be managed by most up to date rating and more information, please visit: sustainalytics.com/
programs or initiatives 3. Managed Risk = Manageable Risk multiplied by a Management score of 36.4% 4. Management Gap assesses risks that are not esg-ratings/.
managed, but are considered manageable 5. ESG Risk Rating Assessment = Overall Unmanaged Risk = Management Gap plus Unmanageable Risk

Peer Analysis 05 Feb 2025 Peers are selected from the company's Sustainalytics-defined Subindustry and are displayed based on the closest market cap values
Company Name Exposure Management ESG Risk Rating

Amazon.com Inc 39.2 | Medium 0 55+ 36.4 | Average 100 0 26.1 | Medium 0 40+

Microsoft Corp 33.6 | Low 0 55+ 64.3 | Strong 100 0 13.5 | Low 0 40+

Etsy Inc 32.6 | Low 0 55+ 55.9 | Strong 100 0 15.6 | Low 0 40+

Appendix
Historical Morningstar Rating
December
Amazon.com November
Inc AMZN 6 Feb October September
2025 22:36, UTC August July May May April March February January

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - QQ QQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQ QQQ QQQ QQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQ QQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQ QQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQQ

December
Microsoft Corp November
MSFT 6 Feb October
2025 22:33, UTC September August July May May April March February January

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - QQQQ QQQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQ QQQ QQQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQ QQQ QQQ QQQQ QQQ QQQQ QQQ QQQQ QQQ QQQQ QQQ QQQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQ QQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQ

December
Walmart Inc November
WMT 6 Feb 2025 October
22:33, UTC September August July May May April March February January

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - Q Q
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
Q Q Q Q Q QQ QQ QQ QQ QQ QQ QQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQ QQQ QQ QQ QQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQ QQQ QQQ QQQ QQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQ QQQ QQQ QQQ QQ QQQ QQQ QQ QQ QQQ QQQ QQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQ QQ QQ QQ QQ QQ QQQ QQ QQ QQQ QQQ QQ

December
eBay Inc EBAY November
6 Feb 2025 22:33, October
UTC September August July May May April March February January

Dec 2025 Nov 2025 Oct 2025 Sep 2025 Aug 2025 Jul 2025 Jun 2025 May 2025 Apr 2025 Mar 2025 Feb 2025 Jan 2025
- - - - - - - - - - QQQ QQQ
Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQ QQQQ QQQQ QQQ QQQ QQQ QQQQ QQQQ QQQ QQQQ QQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQ QQQ QQQ QQQ QQ QQ QQ QQQ QQQ QQQ QQQ QQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQ QQQ QQQ QQQ QQQ QQ QQQ QQQ QQQ QQQQ QQQ QQQ

Research Methodology for Valuing Companies

Overview turns on invested capital (or ROIC) over and above our es- rive our annual free cash flow forecast.
At the heart of our valuation system is a detailed projec- timate of a firm’s cost of capital, or weighted average
Stage II: Fade
tion of a company’s future cash flows, resulting from our cost of capital (or WACC). Without a moat, profits are
The second stage of our model is the period it will take
analysts’ research. Analysts create custom industry and more susceptible to competition. We have identified five
the company ’s return on new invested capital—the re-
company assumptions to feed income statement, balance sources of economic moats: intangible assets, switching
turn on capital of the next dollar invested (“RONIC”)—to
sheet, and capital investment assumptions into our glob- costs, network effect, cost advantage, and efficient scale.
decline (or rise) to its cost of capital. During the Stage II
ally standardized, proprietary discounted cash flow, or
Companies with a narrow moat are those we believe are period, we use a formula to approximate cash flows in
DCF, modeling templates. We use scenario analysis, inde-
more likely than not to achieve normalized excess returns lieu of explicitly modeling the income statement, balance
pth competitive advantage analysis, and a variety of other
for at least the next 10 years. Wide-moat companies are sheet, and cash flow statement as we do in Stage I. The
analytical tools to augment this process. Moreover, we
those in which we have very high confidence that excess length of the second stage depends on the strength of
think analyzing valuation through discounted cash flows
returns will remain for 10 years, with excess returns more the company’s economic moat. We forecast this period to
presents a better lens for viewing cyclical companies,
likely than not to remain for at least 20 years. The longer last anywhere from one year (for companies with no eco-
high-growth firms, businesses with finite lives (e.g.,
a firm generates economic profits, the higher its intrinsic nomic moat) to 10–15 years or more (for wide-moat com-
mines), or companies expected to generate negative
value. We believe low-quality, no-moat companies will panies). During this period, cash flows are forecast using
earnings over the next few years. That said, we don’t dis-
see their normalized returns gravitate toward the firm’s four assumptions: an average growth rate for EBI over the
miss multiples altogether but rather use them as support-
cost of capital more quickly than companies with moats. period, a normalized investment rate, average return on
ing cross-checks for our DCF-based fair value estimates.
new invested capital (RONIC), and the number of years
We also acknowledge that DCF models offer their own
When considering a company's moat, we also assess until perpetuity, when excess returns cease. The invest-
challenges (including a potential proliferation of estim-
whether there is a substantial threat of value destruction, ment rate and return on new invested capital decline un-
ated inputs and the possibility that the method may miss
stemming from risks related to ESG, industry disruption, til a perpetuity value is calculated. In the case of firms
shortterm market-price movements), but we believe these
financial health, or other idiosyncratic issues. In this con- that do not earn their cost of capital, we assume marginal
negatives are mitigated by deep analysis and our
text, a risk is considered potentially value destructive if its ROICs rise to the firm’s cost of capital (usually attribut-
longterm approach.
occurrence would eliminate a firm’s economic profit on a able to less reinvestment), and we may truncate the
cumulative or midcycle basis. If we deem the probability second stage.
Morningstar’s equity research group (”we,” “our”) be-
lieves that a company’s intrinsic worth results from the of occurrence sufficiently high, we would not characterize
the company as possessing an economic moat. Stage III: Perpetuity
future cash flows it can generate. The Morningstar Rating
Once a company’s marginal ROIC hits its cost of capital,
for stocks identifies stocks trading at a discount or premi-
2. Estimated Fair Value we calculate a continuing value, using a standard per-
um to their intrinsic worth—or fair value estimate, in
Combining our analysts’ financial forecasts with the petuity formula. At perpetuity, we assume that any
Morningstar terminology. Five-star stocks sell for the
firm’s economic moat helps us assess how long returns growth or decline or investment in the business neither
biggest risk adjusted discount to their fair values, where-
on invested capital are likely to exceed the firm’s cost of creates nor destroys value and that any new investment
as 1-star stocks trade at premiums to their intrinsic worth.
capital. Returns of firms with a wide economic moat rat- provides a return in line with estimated WACC.
Four key components drive the Morningstar rating: (1) our ing are assumed to fade to the perpetuity period over a
longer period of time than the returns of narrow-moat Because a dollar earned today is worth more than a dollar
assessment of the firm’s economic moat, (2) our estimate
firms, and both will fade slower than no-moat firms, in- earned tomorrow, we discount our projections of cash
of the stock’s fair value, (3) our uncertainty around that
creasing our estimate of their intrinsic value. flows in stages I, II, and III to arrive at a total present
fair value estimate and (4) the current market price. This
value of expected future cash flows. Because we are
process ultimately culminates in our singlepoint star rat-
Our model is divided into three distinct stages: modeling free cash flow to the firm—representing cash
ing.
available to provide a return to all capital providers—we
discount future cash flows using the WACC, which is a
1. Economic Moat Stage I: Explicit Forecast
weighted average of the costs of equity, debt, and pre-
The concept of an economic moat plays a vital role not In this stage, which can last five to 10 years, analysts
ferred stock (and any other funding sources), using ex-
only in our qualitative assessment of a firm’s long-term make full financial statement forecasts, including items
pected future proportionate long-term, market-value
investment potential, but also in the actual calculation of such as revenue, profit margins, tax rates, changes in
weights.
our fair value estimates. An economic moat is a structural workingcapital accounts, and capital spending. Based on
feature that allows a firm to sustain excess profits over a these projections, we calculate earnings before interest,
3. Uncertainty Around That Fair Value Estimate
long period of time. We define economic profits as re- after taxes (EBI) and the net new investment (NNI) to de-
Morningstar’s Uncertainty Rating is designed to capture
the range of potential outcomes for a company ’s intrinsic
Morningstar Equity Research Star Rating Methodology
value. This rating is used to assign the margin of safety
required before investing, which in turn explicitly drives
our stock star rating system. The Uncertainty Rating is
aimed at identifying the confidence we should have in as-
signing a fair value estimate for a given stock.

Our Uncertainty Rating is meant to take into account any-

thing that can increase the potential dispersion of future
outcomes for the intrinsic value of a company, and any-
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

thing that can affect our ability to accurately predict Morningstar Equity Research Star Rating Methodology
these outcomes. The rating begins with a suggested rat-
ing produced by a quantitative process based on the trail-
ing 12-month standard deviation of daily stock returns.
An analyst overlay is then applied, with analysts using
the suggested rating, historical rating data, and their own
knowledge of the company to inform them as they make
the final Uncertainty Rating decision. Ultimately, the rat-
ing decision rests with the analyst. Analysts take into ac-
count many characteristics when making their final de-
cision, including cyclical factors, operational and financial
factors such as leverage, company-specific events, ESG
risks, and anything else that might increase the potential
dispersion of future outcomes and our ability to estimate
those outcomes.

Our recommended margin of safety—the discount to fair

value demanded before we’d recommend buying or
selling the stock—widens as our uncertainty of the es-
timated value of the equity increases. The more uncertain
we are about the potential dispersion of outcomes, the
greater the discount we require relative to our estimate of
the value of the firm before we would recommend the
purchase of the shares. In addition, the Uncertainty Rat-
ing provides guidance in portfolio construction based on
risk tolerance. Once we determine the fair value estimate of a stock, we justed return is highly likely over a multiyear time frame.
compare it with the stock’s current market price on a Scenario analysis developed by our analysts indicates
Our Uncertainty Ratings are: Low, Medium, High, Very daily basis, and the star rating is automatically re-calcu- that the current market price represents an excessively
High, and Extreme. lated at the market close on every day the market on pessimistic outlook, limiting downside risk and maximiz-
which the stock is listed is open. Our analysts keep close ing upside potential.
Margin of Safety
tabs on the companies they follow, and, based on thor-
Qualitative Analysis
QRating ough and ongoing analysis, raise or lower their fair value QQQQ We believe appreciation beyond a fair risk-ad-
Uncertainty Ratings QQQQQRating
estimates as warranted. justed return is likely.
Low 20% Discount 25% Premium
Medium 30% Discount 35% Premium QQQ Indicates our belief that investors are likely to re-
Please note, there is no predefined distribution of stars.
High 40% Discount 55% Premium ceive a fair risk-adjusted return (approximately cost of
That is, the percentage of stocks that earn 5 stars can
Very High 50% Discount 75% Premium equity).
fluctuate daily, so the star ratings, in the aggregate, can
Extreme 75% Discount 300% Premium serve as a gauge of the broader market’s valuation. When
there are many 5-star stocks, the stock market as a whole QQ We believe investors are likely to receive a less than
Our uncertainty rating is based on the interquartile range, fair risk-adjusted return.
is more undervalued, in our opinion, than when very few
or the middle 50% of potential outcomes, covering the
companies garner our highest rating.
25th percentile–75th percentile. This means that when a Q Indicates a high probability of undesirable risk-adjus-
stock hits 5 stars, we expect there is a 75% chance that ted returns from the current market price over a multiyear
We expect that if our base-case assumptions are true the
the intrinsic value of that stock lies above the current time frame, based on our analysis. Scenario analysis by
market price will converge on our fair value estimate over
market price. Similarly, when a stock hits 1 star, we ex- our analysts indicates that the market is pricing in an ex-
time generally within three years (although it is im-
pect there is a 75% chance that the intrinsic value of that cessively optimistic outlook, limiting upside potential and
possible to predict the exact time frame in which market
stock lies below the current market price. leaving the investor exposed to Capital loss.
prices may adjust).

4. Market Price Our star ratings are guideposts to a broad audience and Other Definitions
The market prices used in this analysis and noted in the individuals must consider their own specific investment Last Price: Price of the stock as of the close of the mar-
report come from exchange on which the stock is listed goals, risk tolerance, tax situation, time horizon, income ket of the last trading day before date of the report.
which we believe is a reliable source. needs, and complete investment portfolio, among other
factors. Capital Allocation Rating: Our Capital Allocation (or
For more details about our methodology, please go to Stewardship) Rating represents our assessment of the
https://shareholders.morningstar.com The Morningstar Star Ratings for stocks are defined be- quality of management’s capital allocation, with particu-
low: lar emphasis on the firm ’s balance sheet, investments,
Morningstar Star Rating for Stocks QQQQQ We believe appreciation beyond a fair risk ad- and shareholder distributions. Analysts consider compan-
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

ies’ investment strategy and valuation, balance sheet starting at zero (no risk) with lower scores representing vice to any specific investor. Therefore, investments dis-
management, and dividend and share buyback policies. less unmanaged risk and, for 95% of cases, the unman- cussed herein may not be suitable for all investors; in-
Corporate governance factors are only considered if they aged ESG Risk score is below 50. vestors must exercise their own independent judgment as
are likely to materially impact shareholder value, though to the suitability of such investments and recommenda-
either the balance sheet, investment, or shareholder dis- Based on their quantitative scores, companies are tions in the light of their own investment objectives, ex-
tributions. Analysts assign one of three ratings: "Exem- grouped into one of five Risk Categories (negligible, low, perience, taxation status and financial position. Morning-
plary", "Standard", or "Poor". Analysts judge Capital Alloc- medium, high, severe). These risk categories are absolute, star encourages Report recipients to read all relevant is-
ation from an equity holder’s perspective. Ratings are de- meaning that a ‘high risk’ assessment reflects a compar- sue documents (e.g., prospectus) pertaining to the secur-
termined on a forward looking and absolute basis. The able degree of unmanaged ESG risk across all subindus- ity concerned, including without limitation, information
Standard rating is most common as most managers will tries covered. relevant to its investment objectives, risks, and costs be-
exhibit neither exceptionally strong nor poor capital alloc- fore making an investment decision and when deemed
ation. The ESG Risk Rating Assessment is a visual representa- necessary, to seek the advice of a financial, legal, tax,
tion of Sustainalytics ESG Risk Categories on a 1 to 5 and/or accounting professional. The information, data,
Capital Allocation (or Stewardship) analysis published pri- scale. Companies with Negligible Risk = 5 Globes, Low analyses and opinions presented herein are not warran-
or to Dec. 9, 2020, was determined using a different pro- Risk = 4, Medium Risk = 3 Globes, High Risk = 2 Globes, ted to be accurate, correct, complete or timely. Unless
cess. Beyond investment strategy, financial leverage, and Severe Risk = 1 Globe. For more information, please visit otherwise provided in a separate agreement, neither
dividend and share buyback policies, analysts also con- sustainalytics.com/esg-ratings/ Morningstar, Inc. or the Equity Research Group repres-
sidered execution, compensation, related party transac- ents that the report contents meet all of the presentation
tions, and accounting practices in the rating. Ratings should not be used as the sole basis in evaluating and/or disclosure standards applicable in the jurisdiction
a company or security. Ratings involve unknown risks and the recipient is located.
Capital Allocation Rating: Our Capital Allocation (or uncertainties which may cause our expectations not to
Stewardship) Rating represents our assessment of the occur or to differ significantly from what was expected Except as otherwise required by law or provided for in a
quality of management’s capital allocation, with particu- and should not be considered an offer or solicitation to separate agreement, the analyst, Morningstar, Inc. and
lar emphasis on the firm’s balance sheet, investments, buy or sell a security. the Equity Research Group and their officers, directors
and shareholder distributions. Analysts consider compan- and employees shall not be responsible or liable for any
ies’ investment strategy and valuation, balance sheet Risk Warning trading decisions, damages or other losses resulting from,
management, and dividend and share buyback policies. Please note that investments in securities are subject to or related to, the information, data, analyses or opinions
Corporate governance factors are only considered if they market and other risks and there is no assurance or guar- within the report.
are likely to materially impact shareholder value, though antee that the intended investment objectives will be
either the balance sheet, investment, or shareholder dis- achieved. Past performance of a security may or may not The Report and its contents are not directed to, or inten-
tributions. Analysts assign one of three ratings: "Exem- be sustained in future and is no indication of future per- ded for distribution to or use by, any person or entity who
plary", "Standard", or "Poor". Analysts judge Capital Alloc- formance. A security investment return and an investor ’s is a citizen or resident of or located in any locality, state,
ation from an equity holder’s perspective. Ratings are de- principal value will fluctuate so that, when redeemed, an country or other jurisdiction where such distribution, pub-
termined on a forward looking and absolute basis. The investor ’s shares may be worth more or less than their lication, availability or use would be contrary to law or
Standard rating is most common as most managers will original cost. A security’s current investment performance regulation or which would subject Morningstar, Inc. or its
exhibit neither exceptionally strong nor poor capital alloc- may be lower or higher than the investment performance affiliates to any registration or licensing requirements in
ation. noted within the report. Morningstar’s Uncertainty Rating such jurisdiction.
serves as a useful data point with respect to sensitivity
Capital Allocation (or Stewardship) analysis published pri- analysis of the assumptions used in our determining a fair Where this report is made available in a language other
or to Dec. 9, 2020, was determined using a different pro- value price. than English and in the case of inconsistencies between
cess. Beyond investment strategy, financial leverage, and the English and translated versions of the report, the Eng-
dividend and share buyback policies, analysts also con- lish version will control and supersede any ambiguities
sidered execution, compensation, related party transac- General Disclosure associated with any part or section of a report that has
tions, and accounting practices in the rating. been issued in a foreign language. Neither the analyst,
Unless otherwise provided in a separate agreement, re-
cipients accessing this report may only use it in the coun- Morningstar, Inc., or the Equity Research Group guaran-
Sustainalytics ESG Risk Rating Assessment:The ESG tees the accuracy of the translations.
try in which the Morningstar distributor is based. Unless
Risk Rating Assessment is provided by Sustainalytics; a
stated otherwise, the original distributor of the report is
Morningstar company. This report may be distributed in certain localities, coun-
Morningstar Research Services LLC, a U.S.A. domiciled
financial institution. tries and/or jurisdictions (“Territories ”) by independent
Sustainalytics’ ESG Risk Ratings measure the degree to third parties or independent intermediaries and/or distrib-
which company’s economic value at risk is driven by en- utors (“Distributors”). Such Distributors are not acting as
This Report is for informational purposes, should not be
vironment, social and governance (ESG) factors. agents or representatives of the analyst, Morningstar,
the sole piece of information used in making an invest-
ment decision, and has no regard to the specific invest- Inc. or the Equity Research Group. In Territories where a
Sustainalytics analyzes over 1,300 data points to assess a Distributor distributes our report, the Distributor is solely
ment objectives, financial situation or particular needs of
company’s exposure to and management of ESG risks. In responsible for complying with all applicable regulations,
any specific recipient. This publication is intended to
other words, ESG Risk Ratings measures a company’s un- laws, rules, circulars, codes and guidelines established by
provide information to assist investors in making their
managed ESG Risks represented as a quantitative score. local and/or regional regulatory bodies, including laws in
own investment decisions, not to provide investment ad-
Unmanaged Risk is measured on an open-ended scale
© Morningstar 2025. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

connection with the distribution third-party research re- on an arms’ length basis including software products distribution in New Zealand to wholesale clients only and
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services, licenses to republish our ratings and research ents (as those terms are defined in the Financial Markets
Conflicts of Interest in their promotional material, event sponsorship and Conduct Act 2013).The information, views and any recom-
u No interests are held by the analyst with respect to the website advertising. mendations in this material are provided for general in-
security subject of this investment research report. formation purposes only, and solely relate to the compan-
u Morningstar, Inc. may hold a long position in the se- Further information on Morningstar, Inc.’s conflict of in- ies and investment opportunities specified within. Our re-
curity subject of this investment research report that terest policies is available from http://global.morning- ports do not take into account any particular investor ’s
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u Analysts’ compensation is derived from Morningstar, Risk Warning Please note that investments in securities making any investment decision.
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u Morningstar’s overall earnings are generated in part by and an investor's principal value will fluctuate so that, vestors only. Neither Morningstar Investment Manage-
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Morningstar Stock Analyst Report 02-07-2025

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Morningstar Equity Analyst Report | Report as of 7 Feb 2025 06:53, UTC | Reporting Currency: USD | Trading Currency: USD

| Exchange: NASDAQ - ALL MARKETS Page 1 of 24

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Price vs. Fair Value

Fair Value: 240.00

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Fair Value Fair Value Last Close

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

We assign Amazon a Morningstar Uncertainty Rating of Medium.

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

immaterial to the company’s financials.

Analyst Notes Archive

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Competitors Price vs. Fair Value

Microsoft Corp MSFT

Fair Value: 490.00

Walmart Inc WMT

Last Close: 102.85

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Competitors Price vs. Fair Value

eBay Inc EBAY

Last Close: 67.50

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

Morningstar Historical Summary

Valuation as of 31 Jan 2025

Morningstar Analyst Historical/Forecast Summary as of 06 Feb 2025

Amazon.com Inc AMZN QQQ 7 Feb 2025 06:51, UTC

ESG Risk Rating Breakdown

Exposure Subject Subindustry (38.0) u Exposure represents a company’s vulnerability to ESG

Management Gap4 22.9 100 0 programs, practices, and policies

Overall Unmanaged Risk 26.1 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

Research Methodology for Valuing Companies

Our Uncertainty Rating is meant to take into account any-

Research Methodology for Valuing Companies

Our recommended margin of safety—the discount to fair

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

vestment Adviser India Private Limited offers Investment

For recipients in Japan: The Report is distributed by Ib-

For recipients in Singapore: For Institutional Investor

For recipients in Korea: The report is distributed by

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