How will Amazon look in 2027?

Amazon (Amazon.com Inc.) was founded by Jeff Bezos in July 1994 in Washington, USA. Initially started as a
small internet bookstore Amazon has evolved to be one of the largest online retailer of the world with products
ranging from retail goods, consumer electronics, digital content to Amazon Web Services (AWS). Amazon has
expanded globally over the years thus minimizing the risks from overdependence on US market or any one
international market. Amazon has significant operating subsidiaries in 14 countries Germany, UAE, India, Japan,
UK, France, Spain, Italy Mexico, Singapore, Canada. Australia, Netherlands, Brazil, Turkey and China. Amazon’s
international operations brought US$74.7 billion which accounted for 26.6% of its revenue in 2019. Also the
acquisition of subsidiaries and creation of new products such as Zoox, IMDB, Ring, Whole Foods, Twitch, Kupier
Systems, Amazon Prime Video, Amazon Music, Amazon Studios, Amazon Web Services, Amazon Labs 126
helped Amazon create a diversified portfolio of products and services from books to media content, digital
streaming, groceries, apparel, e-book readers like Kindle, digital advertising, cloud computing, AI based projects
and a wide range of e-commerce products. Amazon with brand equity of US$220 billion, overtook Apple and
Google to become the most valued brand in 2019. Acquiring Whole Foods for $13.4 billion in 2017 to increase
retail business enabled Amazon to expand its business and surpass Walmart to become the world’s largest retail
company in 2021. Today Amazon is listed in the top big five IT companies. Amazon’s revenue has grown at a
CAGR 27.34% annually over the past five years. Also the net income of Amazon and the company’s stock price
has grown at 52.63% CAGR and 20.96% CAGR respectively annually over the past five years. The e-commerce
leader is very unpredictable, however, these business successes, the company’s financials and continuing
growth in cloud computing bodes well for the company’s future through 2027.
The following tables show the projection for 2027:

Balance Sheet (in US $ Million)

2012 2013 2014 2015 2016 2017 2018 2019 2027
Assets
Cash 8084 8658 14557 15890 19334 20522 31750 36092 66217
Inventories 6031 7411 8299 10243 11461 16047 17174 20497 36828
Total Assets 32555 40159 54505 64747 83402 131310 162648 225248 672962
Liabilities
Long - Term Debt 3084 3191 8265 8227 7694 24743 23495 23414 53577
Total Liabilities 24363 30413 43764 51363 64117 103601 119099 163188 458864
Total Shareholder's
8192 9746 10741 13384 19285 27709 43549 62060 207470
Equity

Amazon.com Inc. Selected Financials

Income Statement (in US $ Million)
2012 2013 2014 2015 2016 2017 2018 2019 2027
Revenues 61093 74452 88988 107006 135987 177866 232887 280522 666625
Net Income -39 274 -241 596 2371 3033 10073 11588 25073
Depreciation 1700 2500 3600 4949 6362 8831 12138 21224 40459
Interest Expense 92 141 210 459 484 848 1417 1600 3398
Pre Tax Income 544 -111 1568 3892 3806 11261 13962 29375
Operating Income after Tax and
676 745 178 2233 4186 4106 12421 14404 30362
Other Adjustments
Operating Income before Tax from
North America 673 458 1507 3108 4331 7296 9201 21166
International 154 -640 -699 -1283 -3062 -2142 -1693 -5483
AWS 1166 360 1425 2361 2837 7267 7033 16416

It is estimated that the total assets and revenues will continue to increase through 2027. Operating income
from North America and AWS will continue to increase. For better Operating income from international
markets, Amazon will have to carefully plan expansion in new untapped emerging markets such as South Korea,
Russia or focus on strengthening its existing operations. Markets like India, Germany, UAE, Japan, Mexico
provide have great growth potential as shown in table given below while China, Brazil, Turkey and Canada
operations do not provide much gains. Emergence of Walmart in India as major competitor to Amazon and
some government policies are a challenge for Amazon India operations.

Amazon.com Inc. market share outside the United States (%)

Country 2015 2016 2017 2018 2019 2027
United Kingdom 23.6 23.8 24.1 24.2 23.3 23.3
Germany 42.1 43.8 45.8 47 48.3 60.7
France 15 15.7 16.3 17.6 16.6 20.9
Japan 20.7 22.4 24.3 26.1 26.9 39.9
Canada 11.2 10 8.5 7.5 6.3 -3.5
China 1.4 1.2 1.1 0.9 0.2 -1.9
Italy 18.4 17.7 15.2 15.3 14.9 7.6
Spain 13.6 14.7 14.7 15.2 15.2 18.2
India 26.7 30.3 32 34.2 35.7 53.3
Brazil 1.1 1 0.9 1.1 1 1.0
Mexico 2.9 5.6 8.7 11.4 13.4 34.9
Netherlands 1.3 1.7 1.8 2 2 3.4
Singapore 8.3 8.2 8.3 8.6 8.7 9.7
Australia 3.6 3.9 4.1 3.8 3.9 4.2
Turkey 1.2 1.1 0.9 0.8 0.8 -0.1
United Arab Emirates 10.5 10.6 46.8 46.3 47.1 160.7

Major e-commerce companies home country market shares (%)

Company Home Country 2015 2016 2017 2018 2019 2027
Amazon.com Inc. USA 26.0 29.2 32.4 33.9 35.6 54.6
Alibaba Group Holding Ltd. China 45.1 43.1 42.2 42.0 42.7 37.9
JD.com Inc. China 23.0 28.7 29.2 30.1 29.4 41.0
ebay Inc. USA 8.7 7.8 7.3 6.6 5.5 -0.5
Walmart Inc. USA 3.0 3.1 3.9 4.5 5.2 9.8
Apple Inc. USA 4.4 3.7 3.6 3.5 4.0 3.1
Rakuten Japan 21.3 19.9 18.6 18.1 17.6 10.3

Major e-commerce companies market share outside the United States (%)
Company Home Country 2015 2016 2017 2018 2019 2027
Amazon.com Inc. USA 14.3 15.1 15.4 15.3 15.1 16.5
Alibaba Group Holding Ltd. China 13.2 13.4 14.1 15.2 16.2 22.5
JD.com Inc. China 6.6 8.7 9.4 10.5 10.8 19.0
ebay Inc. USA 5.4 4.9 4.4 4.1 3.5 0.1
Walmart Inc. USA 1.5 1.1 1.3 2.0 2.2 4.1
Apple Inc. USA 2.8 2.5 2.2 2.1 2.1 0.7
Rakuten Japan 1.5 1.4 1.1 1.0 0.9 -0.4

Geographical Breakdown of Revenue 2012 and 2019

UK Germany Japan Rest of the World
2012 2019 2027 2012 2019 2027 2012 2019 2027 2012 2019 2027
Revenue (US$
6.4 17.5 30.2 8.7 22.2 37.6 7.8 16 25.4 16.7 31.1 47.6
billions)
Growth rate over
the previous year 21.2 20.7 20.1 20.7 11.8 1.6 18.7 15.7 12.3 38 27 14.4
(%)
Percentage of
Amazon's total 10.6 6.2 1.2 14.3 7.9 0.6 12.8 5.7 -2.4 27.4 11.1 -7.5
revenue
Revenue from UK, Germany, Japan and rest of the world is expected to increase through 2027.

Geographical Breakdown of Revenue 2012 and 2019

Int. Total North America Total AWS Amazon Total
2012 2019 2027 2012 2019 2027 2019 2012 2019 2027
Revenue (US$
26.2 74.7 130.1 34.8 170.7 326.0 35 61.1 280.5 531.2
billions)
Growth rate over
the previous year 23 13.4 2.4 30.4 20.8 9.8 36.5 27.1 20.5 13.0
(%)
Percentage of
Amazon's total 43 26.6 7.9 57 60.9 65.4 12.5 100 100 100.0
revenue

By 2027, Amazon AMZN stock is estimated to reach low - US$463.42, medium - US$495.86 and high -
US$530.57.
Very few companies have witnessed long-term success as great as Amazon. The success of Amazon is owed to
innovative and strategic business development (eg. early move into cloud computing), customer centric
approach and global expansion. While Amazon is probably the most successful retailer operating today and
much of its revenue comes from its retail arm but the retention as operating income is much less than from
services like AWS. Although Amazon will continue its growth spree in retail for the foreseeable future, with the
emergence of new entrants, competitors and market sharers especially competitors like Walmart, Alibaba and
JD, the company must remain vigilant and retain its competitive edge. Grand view research forecasts cloud
industry growth through 2027 at a CAGR 15%, AWS is expected to ride this growth wave and continue to serve
the company well. But, like in retail, cloud is too huge to be dominated by one company, with the emergence
of Microsoft as the biggest competitor, rivals with significant cloud infrastructure such as IBM, Alphabet and
others like Twilio and Snowflake who carve out niches, Amazon AWS must remain competitive and innovative.
There are no signs that Amazon will loose its influence anytime soon. Even if growth rates slow over time, its
AWS division leads a sector that is anticipated to continue seeing double digit growth for at least five years
suggesting that AWS will eventually play a bigger role in the business than it does currently. Retail has
consistently been a cutthroat, low-margin industry indicating that Amazon stock will only have a limited amount
of success when it comes to retail. The cloud will continue to be competitive. However, given the industry's
expected double-digit growth, AWS should have proportionately higher profitability. These increased earnings
indicate that the stock will probably increase for at least the majority of the following ten years. Amazon will
continue to mature, which could lead to cash returns for stockholders. Amazon is the largest corporation that
doesn't pay a dividend. The company can offer a payout with its US$71 billion in cash and equivalents on its
balance sheet. By including a dividend, Amazon would attract income-focused investors.
It is too early to make any clear projections for the next five years. But Amazon's finances and commercial
success show that it can continue to thrive for a very long time.
References:
1. https://www.fool.com/investing/2020/10/08/where-will-amazon-be-in-10-years/
2. https://hindiallkuchh.com/amazon-amzn-stock-forecast-2022-2023-2025-
2030/#Amazon_AMZN_Stock_Forecast_2027