How Amazon makes money

When Amazon sells you a charger it bought from a supplier, the whole price counts as Amazon's sales. When another business sells you the same charger on Amazon, Amazon's annual report says it isn't the seller: it counts only its fees for the sale, and for storing, packing and shipping the order if the seller pays for that.

That's why the sellers' line looks smaller than the goods line, even though other sellers' goods are a big part of what shoppers buy. On top come ads, like a seller paying to show up first in search or a video ad on Prime Video, and Prime and other subscriptions.

Amazon's report splits it into three parts: stores in North America, stores everywhere else, and AWS. AWS made $45.6B of Amazon's $80B operating profit.

Selling goods is a thin-margin business, even for Amazon. Every order needs goods, picking, packing and a truck ride: the goods, shipping and video and music content were 49.7% of all Amazon's sales, and shipping cost $102.7B. AWS has no goods to buy. Start-ups, big companies, governments and universities pay to use computers, storage, databases and AI tools Amazon already built, by how much they use.

Data centers and warehouses get built before the sales they're for. Amazon paid $131.8B in cash for buildings and equipment in 2025, up from $83B. About 68% of what it added went to AWS, mostly computers and data centers, including for AI. AWS's sales grew 20%.

So much cash went into building that free cash flow, the cash left after paying for it, fell from $38.2B in 2024 to $11.2B. It's a bet that customers keep needing all those computers for years.