Rapid AWS Expansion and Increased Cloud Spending Signals Strong Outlook for Amazon
An analyst from Mizuho, James Lee, has reiterated a Buy rating on Amazon.com, Inc (NASDAQ:AMZN) with a price target of $230. Lee’s recent survey with a prominent AWS channel partner revealed several positive developments that point towards a strong outlook for Amazon.
Key findings from Lee’s survey include:
– An accelerated sales cycle indicated by an increase in executive business center (EBC) meetings, leading to quicker deal closures.
– Customers are swiftly exiting on-premises data center contracts, demonstrating a faster migration pace to AWS.
– A significant shift in fiscal 2024 budgets towards infrastructure expenditure, hinting at a quicker migration to AWS.
– Expectation for a 20% year-over-year increase in AWS spending, pushing Lee to reiterate Amazon as his top pick.
The survey highlighted a surge in proof of concept projects for new use cases across sectors, showcasing the effectiveness of AWS’s Bedrock service. Lee noted a forecasted 20% year-over-year AWS spending growth, exceeding the consensus of 15%, reinforcing his confidence in Amazon’s growth trajectory.
Lee projects first-quarter revenue and EPS of $141.09 billion and $0.82. AMZN shares traded higher by 3.10% at $185.56 on the last check Friday. The $230 price target is based on a 14x fiscal 2026 EBITDA multiplier, reflecting expectations of continued outperformance by AWS.
This positive outlook for Amazon, driven by rapid AWS expansion and increased cloud spending, signals a strong future for the tech giant in the coming years.
