The first positive factor arises from the online retail giant not needing to issue any major price cuts. Price cuts represent one of a few ways in which AWS maintains its edge compared to other public clouds, like Microsoft Azure, and Google Cloud Platform. Nowak adds, “We view the lack of any major AWS price cut announcements as a signal that AWS intends to continue to compete on increasing functionality and service, rather than price.”
Second, Nowak notes that AWS’ strategic efforts to move higher spending per client seem to be succeeding. Novak contends, “Growing spend per customer is likely to lead to faster AWS top-line growth and higher earnings power.”
Third, “We see continued large enterprise adoption as a bullish sign of AWS’s forward growth as the company continues attacking this $240bn (and, with new servicing, expanding) addressable IT spend.”
Fourth, the analyst points to Alexa as a key enterprise in development, considered “Echo for business.” For instance, major hotel chains could use the Echo as a virtual concierge to lower room temperatures and answer simple questions like where a guest coud find the hotel gym or locate a nearest preferred restaurant. The Echo is even being tested as a clinical research and organization tool. Nowak adds, “These potential business use cases are likely to expand the Echo’s addressable market and long-term earnings contribution.”
On the heels of this positive momentum, Nowak reiterates an Overweight rating on shares of AMZN with a price target of $800, which represents a close to 4% increase from where the stock is currently trading.
According to TipRanks, five-star analyst Brian Nowak is ranked #379 out 4,110 analysts. Nowak has a 66% success rate and yields 7.5% in his yearly returns. When recommending AMZN, Nowak realizes 25.0% in average profits on the stock.
TipRanks analytics demonstrate AMZN as a Strong Buy. Based on 34 analysts polled in the last 3 months, 32 rate a Buy, while only 2 maintain a Hold. The consensus price target stands at $880.47, marking a 14% upside from the shares last closed.