Amazon

Methodology

Amazon's diverse business mix of low-margin retail, high-margin AWS cloud, and growing advertising creates complex earnings dynamics that make this calculation challenging. The company's history of prioritizing growth and market share over near-term profitability means reported earnings often understate economic value creation. This method works better for Amazon post-COVID as profitability has normalized, but still requires careful consideration of segment mix and investment cycles.

Methodology

Amazon's PEG ratio can vary dramatically based on how aggressively the company is investing in new initiatives versus harvesting profits from mature businesses. During heavy investment periods, PEG appears expensive; when Amazon focuses on profitability, it compresses. The conglomerate nature spanning retail, cloud, advertising, and logistics makes PEG less useful than sum-of-the-parts analysis valuing AWS, advertising, and retail separately.

Methodology

Amazon does not pay a dividend and has rarely bought back shares, instead reinvesting virtually all capital into growth initiatives and new business lines. The PEGY therefore mirrors the PEG, offering no additional valuation dimension. Investors in Amazon are betting on the company's ability to compound at scale through AWS expansion, advertising growth, and retail market share gains rather than seeking any capital returns.