Shares of tech giant Amazon (AMZN) jumped 4.7% on July 6 to close at $3,675.74 after the U.S. Department of Defence (DOD) scrapped a $10 billion cloud contract with Microsoft (MSFT) that both companies have been fighting over for the past 20 months.
According to Reuters, the U.S. government will launch a new cloud-computing contract inviting bids from numerous companies, including Amazon and Microsoft.
In November 2019, Microsoft defeated Amazon and won the lucrative Joint Enterprise Defense Infrastructure Cloud, or JEDI contract, which was awarded to modernize the Pentagon’s information technology operations over a period of 10 years.
Amazon challenged the Pentagon’s contract to Microsoft, saying that the result of the award process was unfair and was influenced by U.S. President Donald Trump’s political bias against Amazon.
In January 2020, Amazon filed a motion to halt the deal between its rival Microsoft and the DOD until the court made a decision on its protest.
Over the next several months, a legal battle ensued between Amazon and the DOD. In April 2020, the regulators said that it could not determine whether the Trump administration influenced the award to Microsoft. A year later, in April 2021, a judge refused to abandon Amazon’s claims.
Microsoft and Amazon were not the only companies disputing the contract. In August 2018, Oracle (ORCL) filed a protest after the DOD decided to award the contract to a single company instead of many eligible contenders for the contract.
However, Oracle’s protest was dismissed by the regulators explaining that the single-company award was in the best interest of the government’s national security.
Jefferies analyst Brent Thill recently reiterated a Buy rating and the price target of $4,200 (14.3% upside potential) on the stock.
Consensus among analysts is a Strong Buy based on 30 Buys. The average Amazon price target of $4,320 implies 17.5% upside potential to current levels.
Amazon scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
TELUS International Snaps Up Playment
Talos Disappointed as SENER Chooses Pemex to Operate ZAMA Oilfield
GOL Linhas Reports Record Preliminary Air Traffic Figures for June 2021