## 🛒 Walmart: A Basic Business at Its Core

There's a reason I like talking about Walmart. It's a **basic business**. Over the next few years, Walmart is expected to grow thanks to its booming online sales, powerful advertising business, and smart use of AI and automation to cut costs and boost profits.

Walmart is becoming more than just a retailer. It's turning into a **tech-powered machine** that can compete with Amazon while serving customers across all income levels.

---

## 📊 Let's Look at the Key Numbers

| Metric | Value |
|--------|-------|
| Stock Price | $114 |
| Market Cap | **$916 billion** |
| Enterprise Value | $1.09 trillion |
| Free Cash Flow (Last Year) | $15 billion |
| Net Income | $23 billion |
| P/E Ratio | **40x** |

The $114 stock price? That's useless right now. What we care about is the **market cap**—all shares outstanding multiplied by the share price, $916 billion.

The difference between enterprise value and market cap, about $170 billion, is debt. Since they're retail with lots of leases, this is expected.

---

## 💰 The Gap Between Cash Flow and Net Income

Last year's free cash flow of $15 billion vs. net income of $23 billion—I don't love that difference. But comparing 5-year averages shows $15 billion vs. $13.8 billion, suggesting they've recently increased capital expenditures significantly to grow the business.

Five years ago, they were spending $10-13 billion on capex. Now they're spending **$25 billion**. That's why free cash flow is down. They also had a huge year in 2020 because of COVID.

So I look at this and think, "Okay, I'm not worried about it."

---

## 😬 The Real Concern: Valuation

**40 times earnings**, folks. It's Walmart. Yeah, I know it's going to grow a lot, but it's 40 times earnings.

Look at the profit margin:

| Period | Margin |
|--------|--------|
| 10-year average | 2.45% |
| 5-year average | 2.38% |
| 1-year | 3.26% |

**They make pennies on every dollar they sell.** It's not a high-margin business. They could be getting into higher-margin areas, but 95-98% of revenue comes from retail. This thing isn't going to move much, in my opinion.

Return on invested capital is pretty stable at about 11%.

---

## 📈 What Analysts Think

- 50% EPS growth over the next 5 years (about 10% annually)
- Revenue growth of 4-5% per year

Nothing to write home about, but that's not what matters. **A great company growing like crazy**—if you overpay for it, you're not going to do well. **A boring company like this**—if you pay the right price, you're going to do very well.

---

## 🔢 Calculating Fair Price

Based on a 10-year analysis, here are my assumptions:

| Assumption | Low | Mid | High |
|------------|-----|-----|------|
| Revenue Growth | 2.5% | 3.5% | 4.5% |
| Profit Margin | 2% | 2.5% | 3% |
| FCF Margin | 2.5% | 3% | 3.5% |
| P/E in 10 Years | 17 | 20 | 23 |

The results?

| Price Range | Amount |
|-------------|--------|
| **Low Price** | $30-35 |
| **Mid Price** | $40-50 |
| **High Price** | $60-70 |

The stock is currently at **$114**, but my analysis shows fair value between $30-70.

Even if I bumped revenue growth to 3-5% and margin to 3-4%, the numbers don't change much.

---

## 🎯 Conclusion: It's Just Overpriced

I look at this and say, "It's just overpriced," and that's okay. I'd rather wait until the stock is a lot lower and at the right price. That's what good, successful investing is all about.

> **Be patient.** If valuation is our biggest worry, we just wait for the price to fall and fundamentals to improve. That's easy. We can do that all day.

Even a great company—if it's expensive, wait. That's the mindset of a true investor.

Walmart Stock Analysis: Is the $916 Billion Low-Margin Retail Giant Worth Buying Now?

## ☁️ Why is AWS So Important?

If you had to pick just one reason for Amazon's 13% stock surge? It's **AWS (Amazon Web Services)**. AWS isn't just a business unit—it's the **core engine of Amazon's entire profit**.

## 📊 AWS Revenue: 20%+ Growth Reacceleration

### Quarterly Growth Rate Trend
- **Q1**: 16.9%
- **Q2**: 17.5%
- **Q3**: **20%+ breakthrough!**

AWS revenue growth is **reaccelerating**. This is a crucial signal.

### Why is Reacceleration Important?
- Evidence of surging AI infrastructure demand
- Confirmation of cloud market dominance
- Suggests advantage over competitors (Azure, GCP)

## 💰 AWS Margins: Highest Profitability Business

Comparing margins across Amazon's three major business segments:

| Segment | Operating Margin |
|---------|-----------------|
| North America E-commerce | ~5% |
| International E-commerce | ~2% |
| **AWS** | **~30%** |

AWS records margins **6x higher** than other segments. This is why AWS is called the "profit engine."

## 📈 Backlog: Remarkable Growth

### $200 Billion+ Backlog
AWS backlog has grown to **over $200 billion**. Backlog refers to amounts customers have contracted to use AWS but haven't actually consumed yet.

### Even More Remarkable
What management revealed in the earnings call:
> "New deals signed in October alone **exceeded our total deal volume for all of Q3**"

This shows AWS momentum is **accelerating**.

### Backlog Growth Rate
- Same period last year: $164 billion
- This year: $200 billion+
- **Growth rate: 23%+**

## 🔌 AI Infrastructure Investment

### 2x Data Center Capacity
Management stated they've **doubled power capacity** compared to 2022. Since AI workloads require enormous power, this means they're prepared for AI demand.

### CapEx Strategy
- **Current**: Investing nearly all operating cash flow into data centers
- **Reason**: Demand exceeds supply
- **Result**: Low free cash flow, but this is **intentional growth investment**

## 📊 Segment Revenue Analysis

### Major Revenue Source Growth Rates
| Segment | Q3 Growth | Trend |
|---------|-----------|-------|
| AWS | 20%+ | 🚀 Accelerating |
| Advertising | 23.5% | 🚀 Accelerating |
| 3P Fulfillment | 12% | ↗️ Accelerating |
| Physical Stores | 10% | → Stable |

Not just AWS—**advertising revenue also grew 23.5%**, with high-margin businesses growing simultaneously.

## 🎯 Key Points for Investors

1. **AWS Growth Reacceleration**: 20%+ growth is very impressive at this scale
2. **Backlog Momentum**: New contracts exceeding entire quarter is a strong signal
3. **Margin Structure**: AWS's 30% margin drives overall profits
4. **AI Investment**: Aggressive CapEx lays foundation for future growth

In the next article, we'll analyze Amazon's **valuation and investment outlook**!

AWS Explosive Growth: The Core Engine of Amazon's Profits

## 📈 13% Surge After Earnings—What Happened?

Amazon's stock surged **approximately 13%** after releasing Q3 earnings. This added roughly **$300 billion** in market cap in a single day. What kind of results triggered such a reaction?

## 💰 Revenue: Exceeding Expectations

### Key Figures
- **Revenue**: $180 billion (13-14% YoY growth)
- **vs. Analyst Estimates**: +$3 billion
- **vs. Company Guidance**: +$3 billion (midpoint)

Amazon beat **both** analyst expectations and its own guidance.

## 📊 Profits: The Truth Behind the Numbers

### Surface-Level Numbers
- **EPS**: $1.95 (5% YoY growth)
- **Operating Income**: $17.4 billion (below $18 billion guidance)

At first glance, this seems disappointing, but there's **a special circumstance**.

### $4.3 Billion in One-Time Charges
This quarter included two major one-time expenses:
1. **Restructuring Severance**: Related to workforce reductions
2. **Legal Settlement**: Related to a specific lawsuit

Excluding these, **actual operating income was $21.7 billion**, significantly beating guidance.

## 📉 Margins: Continuous Improvement Trend

### Gross Margin
- **1.8 percentage point improvement**
- On $180 billion revenue, 1.8pp means **$3.2 billion in additional profit**

This is a strong signal that Amazon is improving cost efficiency.

### Operating Margin
Excluding one-time costs, it would have **risen to 12%**. This shows Amazon's profitability is steadily improving.

## 💵 Balance Sheet: Solid Foundation

| Item | Amount |
|------|--------|
| Cash & Cash Equivalents | $94 billion |
| Total Debt | $51 billion |
| Net Cash | $43 billion |

Amazon holds **$43 billion in net cash**, providing ample capacity for future investments and weathering difficult times.

## 🎯 Key Takeaways

1. **Sustained Revenue Growth**: 13-14% growth is impressive for a company this size
2. **Margin Improvement Underway**: 1.8pp gross margin improvement is a key signal
3. **Consider One-Time Costs**: Surface numbers distort the true picture
4. **Excellent Financial Health**: Solid foundation with $43 billion net cash

In the next article, we'll examine the explosive growth of **AWS, the core engine of Amazon's profits**!

earnings financials

Walmart Stock Analysis: Is the $916 Billion Low-Margin Retail Giant Worth Buying Now?

AWS Explosive Growth: The Core Engine of Amazon's Profits

Amazon Q3 Earnings Analysis: Revenue Growth and Margin Improvement