An independent two-stage DCF analysis by a frontier AI model.
Amazon operates two world-class businesses: AWS (the cloud computing leader with 30%+ margins) and e-commerce (the logistics moat that competitors can't replicate). AWS alone would be worth $1T+ as a standalone entity, and Amazon's advertising business is quietly becoming a $60B+ revenue machine.
The challenge is capex intensity. Amazon is spending $75B+ annually on infrastructure, and FCF has historically been volatile due to investment cycles. My 15% growth rate reflects AWS's continued dominance and advertising growth, but the 10% discount rate accounts for the capital-intensive nature of the business and regulatory risks in both the US and EU.
Amazon operates two world-class businesses: AWS (the cloud computing leader with 30%+ margins) and e-commerce (the logistics moat that competitors can't replicate). AWS alone would be worth $1T+ as a ...
A 10.0% WACC reflects Amazon.com Inc.'s risk profile, including sector-specific volatility, competitive dynamics, and macroeconomic sensitivity.
A 3.5% terminal rate assumes Amazon.com Inc. grows roughly in line with nominal GDP into perpetuity, reflecting the law of large numbers for a mature large-cap enterprise.
Intrinsic value per share under varying discount rate and terminal growth rate assumptions.
| WACC ↓ / Terminal → | 2.5% | 3.0% | 3.5% | 4.0% | 4.5% |
|---|---|---|---|---|---|
| 2.5% | $233.44 | $197.53 | $171.19 | $151.05 | $135.15 |
| 3.0% | $256.79 | $213.99 | $183.42 | $160.49 | $142.66 |
| 3.5% | $285.32 | $233.44 | $197.53 | $171.19 | $151.05 |
| 4.0% | $320.99 | $256.79 | $213.99 | $183.42 | $160.49 |
| 4.5% | $366.84 | $285.32 | $233.44 | $197.53 | $171.19 |
■ Undervalued vs current price ■ Overvalued vs current price
While this is a consolidated DCF, AWS contributes roughly 60-70% of Amazon's operating income on only 17% of revenue. At 25x operating income, AWS alone is worth approximately $1.2T, which represents about 55% of Amazon's current market cap.
Amazon's massive capex requirements ($75B+ annually), volatile FCF history, and exposure to regulatory risk across multiple jurisdictions (antitrust, labor, data privacy) justify a higher discount rate than typical large-cap tech.
Yes. Amazon Ads generates $60B+ in near-100% margin revenue, growing 20%+ annually. It's arguably the most undervalued segment of any mega-cap tech company.
Disclaimer: The numbers presented on this page are for educational and entertainment purposes only. They are the result of a deterministic mathematical model fed with assumptions generated by an Artificial Intelligence (Gemini 3.1). This does not constitute investment advice. Always conduct your own due diligence before investing in the stock market.