Loomis Sayles Global Growth Fund on Amazon.com
Thesis
Amazon possesses strong competitive advantages in both e-commerce and cloud computing through scale, technology, logistics, network effects and brand. AWS remains the largest global cloud provider and is benefiting from strong AI demand, while Amazon's retail operations continue to gain market share and shift toward higher-margin advertising, third-party sales and subscription revenue. Loomis Sayles expects low-double-digit consolidated revenue growth with faster growth in operating profit and free cash flow, supported by continued margin expansion in commerce and strong AWS economics. The team believes this long-term earnings power is not reflected in the share price and sees Amazon trading at a significant discount to intrinsic value.
“we believe the company is selling at a significant discount to our estimate of intrinsic value and offers a compelling reward-to-risk opportunity.”
Key risks
- Heavy capital expenditure has materially reduced near-term free cash flow
- AWS margins can fluctuate depending on the level of investment opportunities