Is Amazon (AMZN) stock a good buy?

Is Amazon (AMZN) stock a good buy?

➡️ This is a step-by-step stock review to determine if Amazon (AMZN) stock is a good buy. In this article, we’ll help you complete a 4M checklist. The 4Ms include the MOS (Margin of Safety), Meaning, Moat, and Management.

Table of Contents

  1. Amazon Company History
  2. MOS
  3. Meaning
  4. Moat
  5. Management
  6. News
  7. 4M Summary
  8. Is Amazon stock a good buy?

1. Amazon Company History

➡️ Goal: It’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.

  • In 1994, Jeff Bezos founded Amazon in his garage. The company was originally an online marketplace for books.
  • In 1997, Amazon went public at around $1.50 per share.
  • In 1998, Amazon began selling music and videos.
  • In 1999, Amazon began selling video games, consumer electronics, home improvement items, software, and toys.
  • In 2000, Amazon entered a 10-year agreement with Toys “R” Us, valued at $50M per year plus a cut of sales under which Toys “R” Us would be the exclusive supplier of toys and baby products on Amazon.
  • In 2001, Amazon entered into an agreement with Borders Group to sell books.
  • In 2004, Toys “R” Us sued Amazon because Amazon had knowingly allowed third-party sellers to offer toy and baby products on the platform.
  • In 2006, a court ruled in favor of Toys “R” Us, giving it the right to unwind its agreement with Amazon and Toys “R” Us was awarded $51M.
  • In 2006, Amazon also started FBA (Fulfillment by Amazon) which allowed individuals and small companies to sell products through the Amazon platform and Amazon would fulfill the delivery of those products.
  • In 2006, AWS was launched.
  • In 2007, Borders pulled out of the arrangement to start its own online store. This is where Hedge Fund Manager, Bill Ackman, made a significant bet on Borders and lost hundreds of millions of dollars.
  • In 2011, Amazon announced a partnership with DC Comics for the exclusive rights to many popular comics including Superman, Batman, Green Lantern, The Sandman, and Watchmen. This partnership has caused well-known bookstores like Barnes & Noble to remove these titles from their shelves.
  • In 2012, Amazon bought Kiva Systems to automate its inventory management.
  • In 2013, Amazon announced a partnership with USPS to begin delivering orders on Sundays.
  • In 2017, Amazon bought Whole Foods Market.
  • In 2017, Nike agreed to sell products through Amazon in exchange for better policing of counterfeit goods. This proved unsuccessful and Nike withdrew from the partnership in 2019. Other companies such as Ikea and Birkenstock also stopped selling through Amazon, citing similar frustrations as Nike.
  • In 2018, Amazon reached an agreement with Apple to sell selected products through the platform. Only Apple Authorized Resellers were allowed to sell through Amazon.
  • In 2021, Jeff Bezos announced that he would step down as CEO to become executive chair and Andy Jassy, previous CEO of AWS, became Amazon’s new CEO.

2. MOS (Margin of Safety)

➡️ Goal: When you look at a stock, the first step is to look at the financials. Fortunately, Tykr does this step for us automatically. A stock is either classified On Sale (Potential Buy), Watch (Hold), or Overpriced (Potential Sell). The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make. To determine if a stock is a definitive “Buy” or “Sell”, it’s wise to complete a 4M checklist.

  • Summary: Overpriced
  • Score: 39/100
  • MOS: 0%
  • Share Price: $130
  • Fair Value: $100
  • Revenue: $513B

3. Meaning

How does Amazon make money?

➡️ Goal: It’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.

Amazon’s business model is broken down into three categories.

  1. North America – 61% of revenue
  2. International – 23% of revenue
  3. AWS – 16% of revenue

The various revenue streams are as follows:

E-commerce Sales:

  • Amazon operates one of the largest online marketplaces, selling a wide range of products, including electronics, clothing, home goods, books, and more.
  • It earns revenue by taking a percentage of each transaction made on its platform, known as referral fees or seller fees.

Amazon Web Services (AWS):

  • AWS is a cloud computing platform that provides various services like storage, computing power, databases, analytics, and more to individuals and businesses.
  • AWS generates revenue through a pay-as-you-go model, charging customers based on their usage of services.
  • Some of their customers include Netflix, Meta, Airbnb, Kellogg’s, Mcdonald’s, Pfizer, The Guardian, Twitter, Epic Games, Norstrom, US Navy, US Army, and Finra.

Amazon Prime:

  • Amazon Prime is a subscription-based service that offers benefits like free two-day shipping, access to streaming services (Prime Video, Music), and exclusive deals.
  • Prime members pay a monthly or annual fee, providing a recurring revenue stream for Amazon.


  • Amazon has a significant advertising business, primarily driven by its vast customer data and online presence.
  • It offers display ads, sponsored products, and targeted advertising options to sellers and brands looking to promote their products on the platform.

Subscription Services:

  • Amazon offers additional subscription-based services like Amazon Music Unlimited, Kindle Unlimited, and Audible.
  • These services provide access to a vast library of music, e-books, audiobooks, and other digital content, generating recurring revenue.

Amazon Devices:

  • Amazon manufactures and sells a range of hardware devices, including Kindle e-readers, Fire tablets, Echo smart speakers, and Fire TV devices.
  • Revenue is generated through the sale of these devices, as well as by promoting content and services specific to each device.

Third-Party Marketplace Services:

  • Amazon also offers Fulfillment by Amazon (FBA), where third-party sellers pay fees to store their products in Amazon’s warehouses and utilize its shipping services.
  • It earns revenue through various services provided to these sellers, such as fulfillment, storage, advertising, and seller tools.

Physical Stores:

  • Amazon operates physical retail stores, including Amazon Books, Amazon 4-star, and Amazon Go.
  • These stores offer a curated selection of products and leverage Amazon’s online ecosystem for purchases, contributing to its overall revenue.

Between 1998 and 2023, Amazon acquired over 115 companies. Some of the more well-known companies they purchased include:

  • Wondery – Podcast network and publisher
  • Wickr – Instant messenger used for AWS
  • Ring – Doorbells, cameras, and security
  • Whole Foods Market – Grocery store chain
  • Twitch – Live video streaming for video games, esports, and music
  • Goodreads – Book database
  • Zappos – Online shoe and clothing retailer
  • Alexa – Internet platform
  • IMDB – Movie Database

4. Moat

➡️ Goal: It’s important to understand who the competitors are and how their financials rank against this company. Try to find 5 other competitors to rank against based on Score. The best way to find competitors is to Google “XYZ competition” and replace XYZ with the company name. You can also go to Tykr and click on the “Similar Stocks” tab on each stock to see similar companies in the same industry.

Amazon (AMZN)

  • Summary: Overpriced
  • Score: 39/100
  • MOS: 0%
  • Share Price: $130
  • Fair Value: $100
  • Revenue: $513B

The top 5 competitors of Amazon:

Microsoft (MSFT)

  • Summary: Watch
  • Score: 78/100
  • MOS: 0%
  • Share Price: $334
  • Fair Value: $265
  • Revenue: $198B

Alphabet (GOOGL)

  • Summary: Watch
  • Score: 44/100
  • MOS: 61%
  • Share Price: $118
  • Fair Value: $194
  • Revenue: $282B

Rackspace (RXT)

  • Summary: Overpriced
  • Score: 44/100
  • MOS: 0%
  • Share Price: $2.63
  • Fair Value: $3.04
  • Revenue: $3.12B

Walmart (WMT)

  • Summary: Overpriced
  • Score: 34/100
  • MOS: 0%
  • Share Price: $158
  • Fair Value: $145
  • Revenue: $611B

Alibaba (BABA)

  • Summary: Overpriced
  • Score: 50/100
  • MOS: 0%
  • Share Price: $84
  • Fair Value: $104
  • Revenue: $853B

5. Management

➡️ Goal: It’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. As investors, we should invest in CEOs with humility and integrity. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.

Andy Jassy joined Amazon in 1997 and played a pivotal role in the success and growth of Amazon as one of its most prominent leaders, serving as the CEO of Amazon Web Services (AWS) from April 2016 to July 2021 and then becoming the CEO of Amazon overall.

Some of Jassy’s biggest accomplishments at Amazon include:

  • He was instrumental in the inception and development of AWS, joining the team in its early stages and overseeing its growth into a multi-billion-dollar business.
  • He led AWS to numerous significant milestones, including reaching $10 billion in annual revenue in 2016 and surpassing $40 in annual revenue in 2020.
  • Jassy played a key role in popularizing the concept of serverless computing with the launch of AWS Lambda, enabling developers to build and run applications without managing servers.
  • He championed the adoption of machine learning and artificial intelligence (AI) technologies, leading to the introduction of services like Amazon Rekognition and Amazon SageMaker.
  • Jassy focused on expanding AWS’s market reach beyond traditional enterprise customers, targeting startups and small businesses by offering scalable and cost-effective cloud solutions.
  • He prioritized investments in emerging technologies, such as voice assistants with the development of Amazon Alexa and smart home devices like Echo, establishing Amazon as a leader in the consumer technology space.
  • Jassy’s commitment to sustainability resulted in initiatives like The Climate Pledge, a commitment to meet the Paris Agreement 10 years early and be net-zero carbon by 2040.


  • Glassdoor Company Rating: 3.8
  • Glassdoor CEO Approval: 72%

6. News

➡️ Goal: It’s important to highlight important company-specific news as well as industry-specific news over the last month and year. We don’t need daily news on a company to make buy or sell decisions because we’re investors, not traders. Overall, we want sufficient news to understand where a company and industry are heading over the next year or few years.

This article from Pinterest states that Pinterest just launched a third-party ads functionality and Amazon is the first partner. Over 463 million people visit Pinterest each month. This partnership will allow every “Pin” to be “shoppable” which means when you’re browsing products on Pinterest, you can buy the products directly through Amazon. Customers are expected to buy Amazon products through Pinterest later in 2023.

This article from states that Amazon steps up competition in Healthcare with One Medical discount. Amazon’s Prime Day deals include a savings of $55 — 28% off the usual price of $199 — on an annual One Medical membership. The deal is available to new US members and applies to their first year of membership. One Medical is a company that was acquired by Amazon earlier this year which is a national primary care organization offering both in-office and virtual services that offers preventative care, chronic care management, common illnesses, and other needs, the release said. The annual membership includes round-the-clock on-demand care through video chat or secure messaging, help with insurance navigation, and in-app bookings of same-day or next-day appointments, per the release.

This article from highlights comments from CEO Andy Jassy on how Amazon will compete against Microsoft and Google in the AI race. Andy Jassy doesn’t believe the retail and cloud computing giant should be counted out of the artificial intelligence race just yet. Earlier this year, AWS unveiled a generative AI service called Bedrock, where clients can use language models from Amazon and other startups to develop their own chatbots and image-generation services. AWS has also developed its own AI-specific chips, called Inferentia and Trainium, which aim to make it easier for developers to run large AI language models in the cloud. It’s going up against Nvidia, whose powerful semiconductors have dominated the market for AI chips. Amazon expects its chips to have “much better price performance than you’ll find anywhere else,” Jassy said.

7. 4M Summary

➡️ Goal: All of our homework on this company leads up to the 4M checklist. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the business, the competition, and the management. If all 4Ms pass, we should have high confidence in buying this stock.

MOS: A score of 39/100 shows the financials are weak and the MOS of 0% says this stock doesn’t have a lot of upside potential. However, this doesn’t mean an investor should give up on Amazon.

Meaning: Amazon does have an impressive business model with e-commerce, AWS, and the various businesses it has purchased over the years.

Moat: There is not a 1-to-1 competitor with Amazon’s business model but there is overlap with other companies including Microsoft, Alphabet, Walmart, and Alibaba. A lot of consumers still prioritize Amazon as the top online e-commerce platform and AWS is still a highly competitive cloud hosting solution in line with Microsoft Azure.

Management: Andy Jassy has done a great job scaling AWS, making it one of the leading cloud-hosting platforms on the market. However, there haven’t been any major innovations with the e-commerce platform but that’s not necessarily a bad thing. In most cases, simplicity is key and the Amazon shopping experience is very simplified. The big question is, how will Amazon leverage AI. That is yet to be determined.

8. Is Amazon stock a good buy?

If you’re interested in Amazon, I would allocate a smaller percentage to your portfolio. When the Summary, Score, and MOS improve and we hear more news about the integration of AI, that may be a great time to allocate a higher percentage.

The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.

If you found this stock review interesting, you may also like this review on Apple.