Amazon’s (AMZN) Stock is Expected to Rally On Along With Its Amazon Web ServicesBy Carrie Williams
World’s largest online retailer and cloud computing company, Amazon.com (NASDAQ: AMZN) has been reporting phenomenal growth from almost all its business ventures. Despite the recent dip in the share prices of the company due to the strenuous relationship between President-elect Trump and CEO Jeff Bezos, the positives reported for Amazon especially in its cloud computing platform Amazon Web Services (AWS), is expected to catapult AMZN’s share prices higher in immediate future.
Commenting on Amazon Web Services, Pacific Crest analyst Brent Bracelin reiterates his Overweight rating today with a $905 price target. This represents an upside of 21.26% from the current price of $746.33.
AWS has been the pioneer in public cloud infrastructure and currently has $10 billion annualized run-rate. The nearest competitor Azure from Microsoft’s numbers is only $2 billion, while Google Cloud is still way behind. AWS is expected to capitalize further on its first mover advantage when compared to its peers, especially since its internal culture drives a rapid pace of innovation. In addition, the agenda of re:Invent also points to the fact that Artificial Intelligence, Alexa, and Aurora would take center stage.
Bracelin is also impressed with the pace of innovation at AWS and noted that the new features were helping drive margin leverage at AWS. The 55% YoY growth was also considered as a rarity among businesses worth $13 billion. Overall, AWS accounts for 50% of operating profits of Amazon currently.
Even though third quarter results of AMZN faltered a bit due to higher-than-anticipated shipping costs, the various businesses like Prime, Kindle, and Amazon Echo are also doing phenomenally well in addition to AWS.
Trump’s election win was definitely a shocker for Amazon. However, it could also turn out to be a huge revenue boost for AMZN once Trump’s promise of lower tax policies gets implemented. This is because lower taxes would result in more customer spending, which translates to more sales for AMZN and further growth for the stock.
The overall analyst consensus on Amazon seems to be positive as well, as the stock has a consensus rating of a Strong Buy based on ratings in the past three months. According to TipRanks.com data the average analysts’ price target is $951.53, being an upside of 27.49% from current levels.