Amazon runs three businesses at once. First, it operates a giant online store where it sells its own products and also lets other sellers list their goods, taking a cut of every sale. Second, it sells advertising space to brands that want to reach shoppers while they browse. Third, and most profitably, it rents computing power and software tools to businesses and governments through Amazon Web Services, known as AWS. Customers pay for AWS the way they pay for electricity: only for what they use. These three streams feed each other and together generated $716.9 billion in net sales in 2025. The diagram below traces where the money goes.
Five years of data tell a clear story about the direction of this business. Revenue has climbed every single year, from $469.8 billion in 2021 to $716.9 billion in 2025. But the more important number is how much of each dollar the company keeps before paying its operating costs. That figure, called the gross margin, has also risen every year without exception.
Rising gross margin means the business is getting more efficient even as it grows larger. The engine behind this shift is AWS. Cloud services carry far higher margins than selling physical products, so as AWS grows faster than the retail stores, it pulls the whole company's profitability upward. AWS grew 20% in 2025 and now accounts for 18% of total net sales but generates the largest share of operating income at $45.6 billion out of a total $80.0 billion. The cash this produces is substantial.
That cash flow improvement also flipped the company's debt position. In 2021 and 2022, Amazon carried net debt, meaning it owed more than it held in cash. By 2023 it had turned net cash positive, and by 2025 it held $21.2 billion more in cash and equivalents than it owed in debt. That kind of balance sheet gives the company room to spend aggressively without needing to borrow. And it is spending aggressively. Capital expenditures reached $128.3 billion in 2025, the majority directed at infrastructure to support AWS growth.
That level of spending is not trivial. At $128.3 billion in a single year, Amazon is making one of the largest infrastructure bets of any company on earth. The stated destination is artificial intelligence. AWS is building out data centers and computing capacity to serve businesses that want to run AI workloads. Amazon has also invested $2.7 billion in Anthropic, an AI company, in 2025 alone. The payoff from those investments is not yet locked in.
Amazon faces several specific documented threats. Regulators in the United States, India, and China are each applying pressure through different mechanisms. In China, local ownership rules force Amazon to use third-party companies for its cloud services, and a change in how those rules are applied could disrupt or shut down those operations. In India, foreign companies cannot directly own online retail businesses, which limits how Amazon can structure its marketplace there. In the United States, the company settled a Federal Trade Commission lawsuit in 2025 for $2.5 billion, and other antitrust and monopolization claims brought by state attorneys general are still active. An unfavorable outcome in those cases could force Amazon to change how it operates its marketplace or advertising business.
There is also a physical supply chain risk at the heart of the AI expansion. AWS depends on a limited number of suppliers for the specialized chips, specifically graphics processing units, needed to run AI workloads. A shortage or disruption in the supply of those chips could slow Amazon's ability to build out and operate the AI services it is counting on for future growth. This is not a hypothetical: chip supply has been tight across the industry, and Amazon is not the only company competing for that limited supply.
There is also a seasonal dimension to the retail business that creates a recurring management challenge. A large portion of annual retail revenue concentrates in the fourth quarter, around the holiday season. If Amazon overstocks products ahead of that period, it may have to mark down or write off inventory. If it understocks, it loses sales it cannot recover. The 10-K notes that for every 1% of additional inventory write-down needed on the 2025 balance, the cost would be approximately $405 million. Managing that balance while also handling the surge in shipping costs that comes with peak demand is an ongoing operational pressure.
That comparison captures the core financial logic of the company today. The retail business is large and growing, but its margins are thin. AWS is the engine that converts scale into real profit. Everything Amazon is spending on AI infrastructure is a wager that AWS will keep that role and extend it into the next era of computing.