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Will Solid AWS Momentum Benefit Amazon's (AMZN) Q1 Earnings?
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Amazon’s (AMZN - Free Report) first-quarter 2020 results, which are scheduled to be released on Apr 30, are likely to reflect strengthening cloud service offerings.
The cloud computing division, Amazon Web Services (AWS), dominates the cloud market on the back of its growing adoption and popularity. This is anticipated to get reflected in the company’s first-quarter performance.
We note that solid momentum across AWS has been aiding Amazon in generating higher margins from the cloud business compared with the traditional retail business. This trend is expected to have continued during the to-be-reported quarter.
AWS revenues came in at $9.95 billion, accounting for 11.4% of net sales in the last reported quarter and surging 34% year over year. We further note that AWS’s operating income improved 18% from the year-ago quarter to $2.6 billion.
We believe an expanding customer base and a strong discount offering for long-term deals are likely to have driven the AWS top line in the quarter under review.
The Zacks Consensus Estimate for first-quarter 2020 AWS net sales is projected at $10.25 billion, indicating an improvement of 33.1% from the year-ago quarter’s reported figure.
Click here to know how the company’s overall first-quarter performance is likely to be.
Factors at Play
The company’s consistent efforts toward expansion of AWS’ product and services portfolio are likely to have helped it maintain dominance in the highly competitive cloud market over Microsoft’s (MSFT - Free Report) Azure, Alphabet’s (GOOGL - Free Report) Google Cloud and International Business Machines’ (IBM - Free Report) cloud division, to name a few, in the to-be-reported quarter.
Further, its strong measures to combat the coronavirus pandemic have been tailwinds. The company made Maven, which is a disease surveillance and outbreak management platform that helps in automating the integration of reports from patients and test results from labs, on the back of its partnership with Conduent in the quarter under review.
Additionally, the commitment of a $2-million investment by AWS to speed up the development of faster COVID-19 testing and the launch of a new program named AWS Diagnostic Development Initiative were noteworthy. These are expected to have aided AWS’s momentum across accredited research institutions and private entities in the quarter under review.
We believe that these AWS-driven COVID-19 management solutions have aided Amazon in gaining investor confidence during the first quarter.
Apart from these, the company’s strengthening data center network is expected to have driven AWS’s first-quarter performance.
During the first quarter, Bundesliga, the professional association football league of Germany having the highest average stadium attendance globally, went all-in on AWS.
Bundesliga leverages AWS’s AI, ML, analytics, compute, database and storage services in order to enhance the football viewing experience by developing new cloud-based services that will help automate processes and boost operational efficiency.
Amazon SageMaker, Amazon Rekognition and Amazon Personalize, to name a few, are services that are helping Bundesliga offer real-time predictions, personalized game footage and marketing promotions.
Further, AWS was selected by Carrier as the preferred cloud provider. Notably, Carrier is leveraging AWS to migrate up to 70% of its 4,000 servers and 996 applications to it.
Also, 3M selected AWS as the preferred cloud provider to migrate its enterprise resource planning system, e-commerce and business-critical enterprise IT applications to it.
Additionally, Second Spectrum selected AWS as its preferred cloud, machine learning (ML), and artificial intelligence (AI) provider.
Consequently, an expanding clientele owing to its portfolio strength is likely to have driven net sales of AWS in the first quarter.
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Will Solid AWS Momentum Benefit Amazon's (AMZN) Q1 Earnings?
Amazon’s (AMZN - Free Report) first-quarter 2020 results, which are scheduled to be released on Apr 30, are likely to reflect strengthening cloud service offerings.
The cloud computing division, Amazon Web Services (AWS), dominates the cloud market on the back of its growing adoption and popularity. This is anticipated to get reflected in the company’s first-quarter performance.
We note that solid momentum across AWS has been aiding Amazon in generating higher margins from the cloud business compared with the traditional retail business. This trend is expected to have continued during the to-be-reported quarter.
AWS revenues came in at $9.95 billion, accounting for 11.4% of net sales in the last reported quarter and surging 34% year over year. We further note that AWS’s operating income improved 18% from the year-ago quarter to $2.6 billion.
We believe an expanding customer base and a strong discount offering for long-term deals are likely to have driven the AWS top line in the quarter under review.
The Zacks Consensus Estimate for first-quarter 2020 AWS net sales is projected at $10.25 billion, indicating an improvement of 33.1% from the year-ago quarter’s reported figure.
Click here to know how the company’s overall first-quarter performance is likely to be.
Factors at Play
The company’s consistent efforts toward expansion of AWS’ product and services portfolio are likely to have helped it maintain dominance in the highly competitive cloud market over Microsoft’s (MSFT - Free Report) Azure, Alphabet’s (GOOGL - Free Report) Google Cloud and International Business Machines’ (IBM - Free Report) cloud division, to name a few, in the to-be-reported quarter.
Further, its strong measures to combat the coronavirus pandemic have been tailwinds. The company made Maven, which is a disease surveillance and outbreak management platform that helps in automating the integration of reports from patients and test results from labs, on the back of its partnership with Conduent in the quarter under review.
Additionally, the commitment of a $2-million investment by AWS to speed up the development of faster COVID-19 testing and the launch of a new program named AWS Diagnostic Development Initiative were noteworthy. These are expected to have aided AWS’s momentum across accredited research institutions and private entities in the quarter under review.
We believe that these AWS-driven COVID-19 management solutions have aided Amazon in gaining investor confidence during the first quarter.
Apart from these, the company’s strengthening data center network is expected to have driven AWS’s first-quarter performance.
Amazon.com, Inc. Revenue (TTM)
Amazon.com, Inc. revenue-ttm | Amazon.com, Inc. Quote
Growing Clientele to Drive AWS Sales
During the first quarter, Bundesliga, the professional association football league of Germany having the highest average stadium attendance globally, went all-in on AWS.
Bundesliga leverages AWS’s AI, ML, analytics, compute, database and storage services in order to enhance the football viewing experience by developing new cloud-based services that will help automate processes and boost operational efficiency.
Amazon SageMaker, Amazon Rekognition and Amazon Personalize, to name a few, are services that are helping Bundesliga offer real-time predictions, personalized game footage and marketing promotions.
Further, AWS was selected by Carrier as the preferred cloud provider. Notably, Carrier is leveraging AWS to migrate up to 70% of its 4,000 servers and 996 applications to it.
Also, 3M selected AWS as the preferred cloud provider to migrate its enterprise resource planning system, e-commerce and business-critical enterprise IT applications to it.
Additionally, Second Spectrum selected AWS as its preferred cloud, machine learning (ML), and artificial intelligence (AI) provider.
Consequently, an expanding clientele owing to its portfolio strength is likely to have driven net sales of AWS in the first quarter.
Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>