Top analyst Brent Bracelin at KeyBanc weighs in on Amazon.com, Inc. (NASDAQ:AMZN) after Wednesday’s AWS Summit 2018 in San Francisco, packed with 9,000 in attendance; an impressive 20% year-over-year jump for the company. The verdict? “Automation is the next cloud wars battle,” wagers Bracelin.
This year’s conference reveals cloud automation matters more to Amazon Web Services than ever, with a battle to lead the cloud market this year shifting away from “features” to a “a new battle of ‘automation,'” the analyst highlights. After all, Bracelin notes that “given AWS releases thousands of new features annually,” this is certainly not off base.
One new move from the AMZN team was unleashed by AMZN CTO Werner Vogels, Amazon Polly- an advanced deep learning text-to-speech web service that for instance could allow a user to transform a written blog to an audio podcast.
As far as Bracelin sees the cloud wars race, three key advantages stand out for AWS with automation: “1) it can drive material cost savings vs. on-premise alternatives; 2) it saves developers time; and 3) it serves as a competitive differentiator vs. Microsoft Azure and Google Cloud.”
Keep in mind, Amazon is well-aware of its competition, as Vogels showcased a slide pinpointing which rival cloud computing players are trailing AWS. Amazon recognizes Microsoft Azure as second to its lead, with Google Cloud as third.
AWS continues to reign as the biggest cloud platform in the world, showcasing a beyond $20 billion revenue run-rate- one that Bracelin points out is more than twice over the size of the IaaS segments from Microsoft Azure and Google Cloud combined.
“After a torrid pace of new AWS innovations that has topped more than 1,000 enhancements annually for 2+ years, the new messaging coming out of AWS suggests the cloud wars in 2018 is moving from a feature race to an automation race,” explains the analyst, who finds himself “encouraged” with AWS’s new features.
Bracelin continues with his breakdown of the IaaS/PaaS competitive landscape: “AWS and Microsoft Azure competitive lead in IaaS/PaaS is widening. Our analysis of the four largest cloud IaaS/PaaS platforms implies the competitive lead that AWS and Microsoft Azure have captured is widening. AWS is the largest IaaS/PaaS platform with $20B+ run-rate, yet growth accelerated to 45% y/y. Microsoft Azure revenue also accelerated, rising 98% y/y to an estimated $6.5B run-rate. This compares to Oracle IaaS/ PaaS revenue growth of 21% on a $1.6B run-rate segment.”
Bottom line, the analyst is “confident” in his bet for AWS revenue to circle twice over to $41 billion within two years’ time; especially considering today’s cloud momentum, fresh release of products, and positive customer feedback at the AWS Summit this year.
That said, the analyst is optimistic, but plays it safe for now, reiterating a Sector Weight rating on AMZN stock without listing a price target.
Brent Bracelin has a very strong TipRanks score with a 74% success rate and a high ranking of #51 out of 4,767 analysts. Bracelin yields 18.2% in his yearly returns. When recommending AMZN, Bracelin garners 34.5% in average profits on the stock.