Amazon.com
‘s cloud computing service won’t be left in the dust during the big tech AI race, according to a Loop Capital analyst.
While
Amazon
(ticker: AMZN) recently reported a slowdown in its Amazon Web Services unit, analyst Rob Sanderson wrote in a research note that it was transitory. He has confidence the deceleration in AWS revenue growth will bottom then reverse.
Amazon
reported first-quarter earnings and sales that beat Wall Street estimates on April 27, but warned customer cloud spending had slowed.
One reason Sanderson, who rates the stock as a Buy with a $140 price target, believes AWS will grow from here is the future of artificial intelligence.
“As the excitement surrounding generative AI has been centered around
Microsoft
and Google, many investors question whether AWS is in a disadvantaged position,” Sanderson wrote. “We think more investors will soon recognize that AI will drive meaningful expansion in cloud demand and AWS will be a major participant.”
But not all analysts are as bullish on Amazon’s cloud growth. Itaú BBA analyst Thiago Alves Kapulskis wrote in a research note after Amazon’s earnings that the competition between Amazon and
Microsoft
‘s (MSFT) cloud services is a concern.
“With so much uncertainty on AMZN and after the significant divergence in Azure vs. AWS, we believe that the market will favor the former, and its parent, rather than the latter,” the analyst wrote. He rates Amazon as Outperform with a $124 price target.
Microsoft reported strong performance from Azure, its cloud platform, during its quarterly earnings.
Shares of Amazon were down 0.4% Monday to $105.19 while the
S&P 500
declined 0.1%. The stock has climbed 25% this year.
Write to Angela Palumbo at [email protected]
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