Amazon Roars Ahead of Tech Rivals in Return on Invested Capital
Piper Sandler's Thomas Champion has reaffirmed his Buy rating on Amazon stock, citing its strong return on invested capital (ROIC) performance. According to Champion, Amazon tops tech rivals Meta and Google in this area, with an average ROIC of around 17% between 2018 and 2025.
The analyst notes that Meta and Google have seen the worst decrease in ROIC in recent years, with ROIC expected to fall by 27 percentage points for Meta between 2024 and 2027. In contrast, Amazon's ROIC is expected to come in at around 14% this year.
Champion attributes Amazon's success to its focus on Amazon Web Services (AWS), which he believes sets it apart from its competitors. He also points out that management commentary on ROIC matches the company-specific trends observed by Piper Sandler.