Amazon’s (AMZN) AWS re:Invent 2016 Conference Updates Give Many Reasons to Cheer

By Carrie Williams

Amazon.com Inc.’s (AMZN) AWS Re:invent conference update give many reasons to cheerIn a report released today, Robert W. Baird analyst Colin Sebastian reiterated his Buy rating on Amazon.com Inc. (NASDAQ: AMZN), giving the stock a $850 price target. The PT is a 13.24% upside from its current price of $750.57 a share.

The analyst Colin Sebastian is ranked among the top 50 analysts, based on his past ratings’ performance according to TipRanks. Sebastian has an average return per rating of +14.1%, and a 66% success rate to provide a profitable rating.

AMZN, after sliding down by nearly 5% in the past week, because of investor concerns regarding the large discounts offered by the company during the holiday season, is currently trading above its 200-day SMA of $713.03. The company’s financial juggernaut Amazon Web Services (AWS)’s fifth-annual “re:Invent” conference is currently being held in Las Vegas and has completed two days of presentations.

Sebastian explained that the latest updates from the conference indicate that attention is clearly being placed on next -generation technologies like Hybrid Cloud integration, Machine Learning/ AI capabilities, increasing enterprise adoption, and continued fast pace of innovation. Several price cuts were also announced by AMZN, indicating that AWS intends to match prices with its competitors to stay ahead in the game.

The company also provided other platform updates like instances with storage/performance enhancements, low-cost virtual private servers that are easy to use, and IoT device support. The addition of four new data center regions in 2017 was also announced during the conference. Presently, there are also rumors making rounds that Amazon is scouting Italian power stations to convert them into data centers.

The three key products of Amazon AI portfolio, image recognition, text to speech, and natural language recognition services (based on Alexa) would be brought to mainstream shortly. The plan for the launch of Amazon Athena, a new analytics product for analyzing data in S3 using SQL was also announced.

Sebastian estimates AWS to generate $12.5 billion in revenues this year, $17.5 billion in 2017 (+42%) and cross $20 billion revenue by Q4/2017.

On the e-commerce side, Amazon is currently reported to be in talks to buy Dubai-based Souq.com for a deal of $1 billion. Souq is the largest player in 20 billion worth Middle East market, which is estimated to grow by 60%-90% in near future, and also has a business model that is nearly identical to Amazon. The cyber Monday is reported to have brought in $3.36 billion worth of online sales and the stock is expected to sustain this momentum and ride the tailwinds of the upcoming holiday shopping season.

Amazon Echo devices had done very good sales during thanksgiving week, and the company is expected to launch a new seven-inch touch screen Echo with the higher price point and superior speakers by 1Q17.

Based on the overall analysts’ recommendations in the past three months, the consensus rating on AMZN is a Strong Buy with a $946.75 price target, according to TipRanks.com. The price is a 26.45% upside from its current share price of $748.70.