Saul Rosenthal | April 1, 2026 Quarter: Q4 FY25 (Dec-2025) | Reported: Feb 5, 2026 Market Cap: ~$2,200B | P/E: 28x | TTM Revenue: $716.9B
Folks, this was a very impressive quarter. Let me be direct: Amazon is not my typical holding — it's a $717 billion revenue behemoth, not the fast-growing $500 million to $5 billion company I usually gravitate toward. But when I look at what's happening inside Amazon — AWS growing 24% on a $142 billion annualized run rate, Advertising growing 23% on a $69 billion base — well, those numbers would be exceptional for ANY company, let alone segments within a two-trillion-dollar enterprise!
The headline number — total revenue up 13.6% — doesn't scream "Saul stock." But that's the blended number that includes a massive $426 billion North America retail business growing 10%. Peel that back and the growth engines are firing hard. AWS re-accelerated from 17% to 24% in four quarters!!! That is such a preposterous result at this scale!
This was a beat-and-raise quarter. Revenue of $213.4 billion beat guidance by 1.85%, the 7th consecutive beat. Q1 FY26 guidance implies 13% YoY growth at midpoint. Revenue trajectory is accelerating. That's what matters.
| Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | |
|---|---|---|---|---|
| Revenue ($B) | $155.7 | $167.7 | $180.2 | $213.4 |
| YoY % | 8.7% | 13.3% | 13.4% | 13.6% |
| QoQ % | -17.1% | 7.7% | 7.5% | 18.4% |
| Beat % (vs guide mid) | +1.60% | +3.84% | +1.93% | +1.85% |
| GM (GAAP) | 50.5% | 51.8% | 50.8% | 48.5% |
| Op Margin (GAAP) | 11.8% | 11.4% | 9.7%* | 11.7%* |
| Op Margin (adj) | 11.8% | 11.4% | 12.1% | 12.8% |
| EPS (GAAP) | $1.59 | $1.68 | $1.95 | $1.95 |
| FCF ($B) | -$8.0 | $0.3 | $0.4 | $14.9 |
| FCF Margin | -5.1% | 0.2% | 0.2% | 7.0% |
*Q3 includes 4.3Bspecialcharges(2.5B FTC + $1.8B severance). Q4 includes 2.4Bcharges(1.1B Italy tax + $730M severance + $610M impairments).
Full Year FY25: Revenue $716.9B (+12.4% YoY), Op Income $80.0B (+16.6%), Net Income $77.7B (+31.3%), EPS $7.17 (+29.7%), Operating CF $139.5B (+20%), FCF $11.2B (-71% — capex-driven).
| Segment | Revenue ($B) | YoY % | Op Income ($B) | Op Margin |
|---|---|---|---|---|
| AWS | $35.6 | +24% | $12.5 | 35.0% |
| North America | $127.1 | +10% | $11.5 | 9.0% |
| International | $50.7 | +17% | $1.0 | 2.1%* |
| Advertising | $21.3 | +23% | (undisclosed) | (very high) |
*International includes $1.1B Italy/lawsuit charges.
| Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | |
|---|---|---|---|---|
| AWS Revenue ($B) | $29.3 | $30.9 | $33.0 | $35.6 |
| AWS YoY % | ~17% | ~19% | ~20% | 24% |
| AWS QoQ Add ($B) | +$0.5 | +$1.6 | +$2.1 | +$2.6 |
| AWS Op Margin | 39.5% | 32.9% | 34.6% | 35.0% |
| AWS Op Income ($B) | $11.5 | $10.2 | $11.4 | $12.5 |
Look at those sequential adds! $0.5B → $1.6B → $2.1B → $2.6B. That's acceleration, period. AWS went from 17% growth to 24% growth in four quarters on a $142 BILLION annualized run rate. This isn't some little company growing fast on a tiny base. This is a monster growing faster! And the backlog is $244 billion, growing 40% YoY — substantially faster than revenue. That's the leading indicator that says this acceleration has legs.
1. AWS Re-Acceleration Is the Headline, and It's Real. 24% YoY growth, fastest in 13 quarters. Andy Jassy said they're "monetizing capacity as fast as we can install it." The 244Bbackloggrowing4010B ARR growing triple-digit percentages... Bedrock at "multibillion-dollar ARR" with customer spend up 60% quarter-over-quarter... Amazon Connect at $1B ARR growing 30%+... these are all sub-businesses that would be major companies on their own!
2. North America Retail Hit Record Profitability. 9.0% operating margin in NA. This used to be a 2-3% margin business! Paid units up 12% (highest quarterly growth in FY25), 3P seller mix at 61%. Same-day delivery reaching ~100 million customers while SIMULTANEOUSLY reducing cost-to-serve for the 3rd straight year. This is the flywheel working.
3. Advertising Is the Hidden Gem. $21.3 billion in Q4, up 23% YoY. Full year $68.6 billion. This is the third-largest digital ad platform globally, and it has the unique closed-loop advantage — the ad and the purchase happen on the same platform! Prime Video ads now reaching 315 million global viewers (up from 200 million early 2024). This business has almost zero marginal cost and very high incremental margins. It's a massive profit engine.
4. The $200B CapEx Elephant. Let me be honest about this. I pay attention to the numbers, and $200 billion in capital expenditure in one year is... extraordinary. FY25 capex was $128B, FY24 was $78B. Operating cash flow of $139.5B is robust, but $200B in capex means FCF will stay deeply compressed. TTM FCF already dropped from $38B to $11B.
But here's the thing — should we run away from this company because they're investing massively in an opportunity where demand is outstripping supply??? When Jassy says "as fast as we install this AI capacity, we are monetizing it," and the backlog is $244 billion and growing 40%, and AWS margins are holding at 35%... this is not speculative spending. This is investing in a business that's already working. It's like building a new factory when your existing factories are running at full capacity and you have orders stacked up. The operating cash flow of $139.5B tells you the underlying business is throwing off enormous cash.
5. Management Wouldn't Give a FCF Floor. Two analysts specifically asked for financial guardrails on the capex cycle. Mark Mahaney and Doug Anmuth both pushed for it. Jassy and Olsavsky deflected both times, talking about "extraordinarily unusual opportunity" instead. I don't love that. I'd prefer management to say "we won't let TTM FCF go below X." But to be fair, they also didn't give guardrails during the AWS buildout in 2015-2018, and that worked out spectacularly.
Jassy's tone was extremely confident — almost euphoric about AI. He called it an "extraordinarily unusual opportunity" twice. He listed an impressive roster of new AWS customers: OpenAI, Visa, NBA, BlackRock, Salesforce, Adobe, HSBC, CrowdStrike. These are not small companies kicking tires — these are major enterprises making strategic commitments.
The custom chip narrative is becoming central. Trainium2 has 1.4 million chips deployed (fastest ramping chip ever), Trainium3 is in production with nearly all supply committed by mid-2026, and Trainium4 is expected 2027 with 6x the compute performance. This vertical integration play — Amazon designing its own chips for its own cloud — gives them a structural cost advantage that competitors simply don't have. Jassy specifically said it provides "30-40% better price performance than comparable GPUs" and gives "customers better prices, gives us better economics."
One thing that raised my antenna: Jassy pivoted away from the question about agentic AI disrupting the advertising funnel. An analyst from MoffettNathanson asked about this, and Jassy redirected to Rufus without quantifying the risk. That's a "non-answer answer." Worth watching, though probably a 2-3 year concern, not imminent.
| Factor | Prior Belief (heading in) | Actual | Assessment |
|---|---|---|---|
| Revenue | ~$210B (guide mid $209.5B) | $213.4B | Beat — 7th consecutive |
| AWS growth | Low-20s continuation | 24% | Beat — fastest in 13 quarters |
| AWS margin | 33-34% (compression) | 35.0% | Beat — holding despite capex ramp |
| Advertising | ~21% growth | 23% ($21.3B) | Beat — sustained mid-20s |
| NA op margin | ~8.5% | 9.0% (record) | Beat |
| FY26 capex guide | $150-180B | ~$200B | Above expectations — bold |
| Q1 FY26 guide | ~$170B | $176.0B mid (+13%) | Solid — sustaining trajectory |
Every major metric beat or exceeded expectations. The one "surprise" was the $200B capex guide being $20-50B above consensus. But given the demand signals, I'd argue that's a sign of strength, not weakness.
Atlas scored this 4/5 conviction with trajectory rated "Accelerating" and SOTP at ~$3.2T versus $2.2T market cap. I largely agree with their assessment of the numbers — they're right that AWS re-acceleration to 24% is the headline and that the $244B backlog is the critical leading indicator.
Where I agree completely: AWS trajectory is exceptional. Advertising is underappreciated. NA margin transformation is real. PEG under 1.0 on earnings growth makes this reasonably valued.
Where I add nuance: Atlas treats the $200B capex somewhat clinically. I want to be more direct — this is the single biggest bet in corporate history. If AI demand inflects downward, there is no circuit breaker. Management was asked directly for guardrails and refused to provide them. That said, I've seen this movie before with AWS itself in 2015-2018 — everyone worried about the spending, and it turned out to be the best capital allocation decision in business history. The question is whether AI infrastructure follows the same pattern.
Where I diverge: Atlas doesn't sufficiently emphasize that this is NOT a typical growth stock for my framework. The 13.6% blended growth rate, while accelerating, is below my usual 25%+ threshold. I wouldn't hold this in my concentrated portfolio. But I fully acknowledge that AWS and Advertising growing 23-24% at massive scale represent some of the most impressive growth engines in the market today.
Strengthening. Let me explain why.
Amazon has three separate businesses that individually would be considered exceptional:
AWS ($142B ARR, growing 24%, 35% op margins, $244B backlog) — If this were a standalone company, it would be worth well over $2 trillion.
Advertising ($69B, growing 23%, near-incremental margins) — This would be worth $500-600B standalone.
North America Retail ($426B, growing 10%, 9.0% op margin, record) — A $38B operating income business with improving margins.
At 28x trailing P/E on 30% EPS growth (PEG under 1.0!), this is not an expensive stock for what you're getting. And the capex cycle, while compressing FCF today, is building the infrastructure for even larger cash flows when the cycle normalizes.
Watchlist — not a current holding. This is not my typical company where I take a 10-20% position. At $717B in revenue and $2.2T market cap, it doesn't fit my portfolio construction of 8-12 concentrated positions in smaller, faster growers. But for someone who holds it, this quarter was a clear "hold and possibly add" result. Every number went the right way. And the P/E of 28x on 30% earnings growth is genuinely reasonable.
If I were looking for a large-cap holding, Amazon would be at the top of my list. The AWS acceleration to 24% on $142B ARR is the kind of number that makes you sit up and take notice regardless of company size.
Best,
Saul