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Should Slowing AWS Worry Amazon (AMZN) in Q2 Earnings?
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Amazon (AMZN - Free Report) is set to report second-quarter 2018 results on Jul 26.
Launched a decade ago, Amazon Web Services (“AWS”) has gained popularity over the past few years and remains an important segment of the company. Notably, it plays a significant role in driving the company’s top-line growth. Moreover, AWS generates much stronger margins than the traditional retail business, which is a major positive for Amazon’s profitability.
The company’s strong focus toward establishment of more and more data centers globally will continue to aid its expansion in the global cloud market. AWS currently operates 55 availability zones across 18 geographic regions globally.
Further, AWS offers substantial discounts for long-term deals and advance payments to its customers. This helps the company in strengthening its competitive position and improving customer base.
However, per the latest Synergy Research report, AWS has been witnessing sluggish or no growth in its market share over the past few quarters compared with Microsoft (MSFT - Free Report) and Alphabet’s (GOOGL - Free Report) Google Cloud, which have been witnessing year-over-year growth in their market shares.
In first-quarter 2018, AWS acquired 33% market share which remained flat on a year-over-year basis. Further, in fourth-quarter 2017, the market share of AWs was pegged at 62%, down from 68% in the year-ago quarter.
Nevertheless, the report also stated that AWS rules the roost and has been successful in maintaining its dominant position in the market.
Click here to know how the company’s overall Q1 performance is likely to be.
AWS is gaining traction with its expanding clientele, courtesy of its continuous efforts to improve its offerings.
High performance rate and rapid deploy ability has made AWS’ tools desirable for small businesses as well as enterprises. Moreover, Amazon’s continuing investments on infrastructure development globally are aiding growth.
AWS net sales, which totaled $5.44 billion and accounted for 10.7% of total net sales in the last reported quarter. The figure surged 48.6% from the year-ago quarter and also surpassed the Zacks Consensus Estimate of $5.24 billion.
Further, AWS is more profitable than Amazon’s retail business. AWS operating income surged 57.3% year over year to $1.40 billion (72.5% of total operating income) in the last quarter.
We believe AWS will continue to deliver solid results driven by its strategic partnerships and expanding customer base and services portfolio. The Zacks Consensus Estimate for AWS revenues in the to-be-reported quarter is pegged at $5.9 billion.
AWS, driven by its reliability and innovative services like AWS machine learning, Amazon SageMaker, Amazon Aurora, AWS Secrets Manager, AWS DeepLens and many more, is gaining momentum with the emerging trend of machine learning and artificial intelligence.
All these are aiding growth of its customer base. In the second quarter, Amazon has acquired Verizon (VZ - Free Report) as its client. In fact, Verizon will be shifting its business-critical applications and database backend systems to AWS. Moreover, Oath, a subsidiary of Verizon has also selected AWS as its preferred public cloud provider.
Further, Ryanair selected AWS to which it will be transferring its infrastructure. Moreover, Zulily has recently chose AWS as its cloud service provider.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Should Slowing AWS Worry Amazon (AMZN) in Q2 Earnings?
Amazon (AMZN - Free Report) is set to report second-quarter 2018 results on Jul 26.
Launched a decade ago, Amazon Web Services (“AWS”) has gained popularity over the past few years and remains an important segment of the company. Notably, it plays a significant role in driving the company’s top-line growth. Moreover, AWS generates much stronger margins than the traditional retail business, which is a major positive for Amazon’s profitability.
The company’s strong focus toward establishment of more and more data centers globally will continue to aid its expansion in the global cloud market. AWS currently operates 55 availability zones across 18 geographic regions globally.
Further, AWS offers substantial discounts for long-term deals and advance payments to its customers. This helps the company in strengthening its competitive position and improving customer base.
However, per the latest Synergy Research report, AWS has been witnessing sluggish or no growth in its market share over the past few quarters compared with Microsoft (MSFT - Free Report) and Alphabet’s (GOOGL - Free Report) Google Cloud, which have been witnessing year-over-year growth in their market shares.
In first-quarter 2018, AWS acquired 33% market share which remained flat on a year-over-year basis. Further, in fourth-quarter 2017, the market share of AWs was pegged at 62%, down from 68% in the year-ago quarter.
Nevertheless, the report also stated that AWS rules the roost and has been successful in maintaining its dominant position in the market.
Click here to know how the company’s overall Q1 performance is likely to be.
Amazon.com, Inc. Revenue (TTM)
Amazon.com, Inc. Revenue (TTM) | Amazon.com, Inc. Quote
AWS Gaining Traction
AWS is gaining traction with its expanding clientele, courtesy of its continuous efforts to improve its offerings.
High performance rate and rapid deploy ability has made AWS’ tools desirable for small businesses as well as enterprises. Moreover, Amazon’s continuing investments on infrastructure development globally are aiding growth.
AWS net sales, which totaled $5.44 billion and accounted for 10.7% of total net sales in the last reported quarter. The figure surged 48.6% from the year-ago quarter and also surpassed the Zacks Consensus Estimate of $5.24 billion.
Further, AWS is more profitable than Amazon’s retail business. AWS operating income surged 57.3% year over year to $1.40 billion (72.5% of total operating income) in the last quarter.
We believe AWS will continue to deliver solid results driven by its strategic partnerships and expanding customer base and services portfolio. The Zacks Consensus Estimate for AWS revenues in the to-be-reported quarter is pegged at $5.9 billion.
AWS, driven by its reliability and innovative services like AWS machine learning, Amazon SageMaker, Amazon Aurora, AWS Secrets Manager, AWS DeepLens and many more, is gaining momentum with the emerging trend of machine learning and artificial intelligence.
All these are aiding growth of its customer base. In the second quarter, Amazon has acquired Verizon (VZ - Free Report) as its client. In fact, Verizon will be shifting its business-critical applications and database backend systems to AWS. Moreover, Oath, a subsidiary of Verizon has also selected AWS as its preferred public cloud provider.
Further, Ryanair selected AWS to which it will be transferring its infrastructure. Moreover, Zulily has recently chose AWS as its cloud service provider.
Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>