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Sector: Consumer
Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 3.99%
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Fundamental View
AS OF 19 Dec 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. AWS is a $132 bn run-rate business growing at 20% with GAAP operating margins in the 30s%. The 3Q25 results and commentary supports our view that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium), and Bedrock service.
While AMZN’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. There are risks related to its ongoing FTC suit although we view a breakup as unlikely. Pro forma for $15 bn issuance and $1.25 bn upcoming maturity, gross lease-adjusted leverage will increase by one tick to 1.0x.
Business Description
AS OF 19 Dec 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 3Q25, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 3Q25, NA segment was 60% of sales, International was 22% of sales, and AWS was 18% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 19 Dec 2025We think Amazon has moderate event risk given its large size (~$2.4 tn market cap).
Amazon’s capex has been ramping for AI cloud infrastructure, which could lead to more jumbo bond deals in 2026.
In September 2023, the FTC and a consortium of states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. Motions for summary judgment are not due until August 2026 with a trial scheduled for February 2027. The biggest risk would be a breakup, although we view that as unlikely.
Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A.
Key Metric
AS OF 19 Dec 2025| $ mn | 2020 | 2021 | 2022 | 2023 | 2024 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% | 11.5% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 | 161,740 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% | 23.4% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% | 17.1% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | n/m | 0% | 0% | 0% |
| Net Debt | (50,497) | (44,453) | 8,516 | (19,451) | (43,051) | (38,880) |
| Gross Leverage | 0.6x | 0.7x | 1.1x | 0.6x | 0.4x | 0.3x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x | 14.5x |
CreditSight View Comment
AS OF 17 Nov 2025We continue to have confidence in CEO Andy Jassy and the long-term business for AWS and Stores. AWS is a $132 bn run-rate business growing at 20% with GAAP OM% in the 30s%. The 3Q25 results and commentary supports our view that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium), and Bedrock service. While AMZN’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. There are risks related to its ongoing FTC suit (not the one that was recently settled on Prime subscriptions) although we view a breakup as unlikely. Pro forma for $15 bn issuance and $1.25 bn upcoming maturity, gross lease-adjusted leverage will increase by one tick to 1.0x.
Recommendation Reviewed: November 17, 2025
Recommendation Changed: May 01, 2024
Featured Issuers
Bank of Philippine Islands
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Fundamental View
AS OF 11 Dec 2025SBUX operates and licenses Starbucks cafe locations. The company is current midway through a restaurant revamp aimed at boosting traffic following weak results in 2024. The program aims at improving the in-store coffee shop experience by investing in labor and reducing the prioritization of takeaway.
The turnaround program has a large labor investment component that is weighing on margins. The company has a strong cash flow cushion and management has committed to high-BBB ratings, but leverage has crept to levels above the ratings range.
A JV deal with Boyu Capital, a Chinese private equity firm, is aimed to turn operations around in a struggling Chinese market, by both improving in-store experience and local relevance, and by expanding locations.
Business Description
AS OF 11 Dec 2025- SBUX is a leading coffee roaster and retailer. The company operates and licenses over 40,000 Starbucks locations worldwide where it sells premium coffee beverages as well as other specialty drinks and prepared foods. Slightly over half the locations are company operated (52%) and the rest are licensed to third party operators.
- In F2025, SBUX generated $37.2 bn in revenue and $5.5 bn in adjusted EBITDA. SBUX has three reporting segments: N. America (74% of F2024 revenue), which covers cafes in the U.S. and Canada; International (21%), which includes China, Japan, Latin America, and EMEA; and Channel Development (5.0%) which includes revenue from other branded products sold outside retail locations through partnerships with large consumer companies such as Nestle and PepsiCo.
- On a geographic basis, SBUX's two largest regions are the U.S. (47% of cafes), and China (37%).
Risk & Catalysts
AS OF 11 Dec 2025SBUX entered an agreement to form a JV with Boyu Capital to operate the company’s retail coffee business in China. The deal is expected to finalize in F2Q26, and the company did not explicitly state where proceeds would be allocated.
In response to the activist attacks, SBUX announced an unexpected change in CEO and hired Brian Niccol, a veteran of the quick service restaurant industry with a successful track record at Taco Bell and Chipotle.
Lower discretionary spending in the U.S. could continue to weigh on SBUX’s sales outlook. We view its premium-priced beverage offerings as having significant risk of consumer trade down into more value-oriented options.
Investments behind the company’s new store imaging have increased costs and weighed on margins, in large part due to significant investments in labor.
Key Metric
AS OF 11 Dec 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 4Q25 |
|---|---|---|---|---|---|
| Revenue | 29,061 | 32,250 | 35,976 | 36,176 | 37,184 |
| EBITDA | 6,775 | 6,385 | 7,252 | 7,001 | 5,463 |
| EBITDA Margin | 23.3% | 19.8% | 20.2% | 19.4% | 14.7% |
| EBITDA-Capex to Revenue | 18.3% | 14.1% | 13.7% | 11.7% | 8.5% |
| Total Debt | 14,616 | 15,044 | 15,400 | 15,568 | 16,075 |
| Net Debt | 8,160 | 12,226 | 11,848 | 12,282 | 12,855 |
| Net Leverage | 1.2x | 1.9x | 1.6x | 1.8x | 2.4x |
| Lease Adjusted Debt to EBITDAR | 2.9x | 3.1x | 2.8x | 3.0x | 3.7x |
| EV / EBITDA | 20.4x | 17.1x | 16.1x | 17.6x | 20.0x |
CreditSight View Comment
AS OF 16 Jan 2026SBUX is in the early phases of an operational turnaround plan intent on reigniting foot traffic by improving the in-store experience. The “Back to Starbucks” program has come at the expense of margin due to heavy investments in labor. While the plan is ultimately to increase transactions and tickets due to improved experiences, we are skeptical that the company will be able to recoup the margin. Also, the strategy comes at a time when economic uncertainty could weigh on discretionary purchases. Management has committed to high-BBB ratings, but the margin compression is driving leverage creep. We recommend a wait and see approach to the name and favor McDonald’s bonds in the meanwhile.
Recommendation Reviewed: January 16, 2026
Recommendation Changed: May 01, 2024
Featured Issuers
Bank of Philippine Islands
SK Hynix
Hyundai Motor