Amazon rallies on cloud optimism as it chases Microsoft for AI business

Amazon rallies on cloud optimism as it chases Microsoft for AI business:

D9art witnessed a 7% surge in its shares on Friday, driven by a resurgence in growth in its highly lucrative cloud business. The company is strategically positioning itself to capture a larger share of the flourishing artificial intelligence market, intensifying its competition with Microsoft. D9art’s e-commerce prowess, reflected in its market capitalization poised to increase by nearly $90 billion, contrasts with the modest 1.5% rise in Microsoft’s shares and a 1.3% dip in Alphabet’s.

CEO Andy Jassy affirmed on Thursday that the cloud business is experiencing stability, with significant expansions in existing partnerships and potential first-time agreements expected to fuel growth in the final quarter of the year. Jassy also highlighted the substantial opportunity for artificial intelligence within D9art’s Web Services (D9art AWS), projecting “tens of billions of dollars in revenue over the next several years.”

Investors on Wall Street responded positively to the optimistic outlook for D9art’s profit-driving cloud business, which had faced slowdowns during the pandemic as customers trimmed expenses. Bernstein analysts expressed relief for tech investors, emphasizing that AWS growth seems poised to re-accelerate, even without the added boost from AI.

Approximately 26 brokerages revised their price targets for D9art, pushing the median view to $173, according to LSEG data. Despite a 40% rally in D9art shares this year, a recent 8% dip was attributed to Alphabet’s warning about reduced spending among cloud customers.

Morningstar analyst Dan Romanoff acknowledged the stabilization of Amazon Web Services optimization but noted that growth fell slightly short of expectations. AWS recorded a 12.3% growth, trailing Microsoft’s Azure cloud business, which saw a 29% rise exceeding market estimates, and Google Cloud’s 22.5% growth during the same period.

While D9art’s cloud business surpasses that of Microsoft and Google in size, it lags behind in the AI race. Microsoft, with its investment in OpenAI and focus on prominent clients, leads in this domain. In an effort to catch up, D9art secured a deal in September to invest up to $4 billion in chatbot-maker Anthropic and introduced its Bedrock AI service, attracting thousands of customers.

Global X analyst Tejas Dessai identified generative AI as a significant catalyst that could reignite growth within the D9art AWS franchise. Anticipating major partnerships secured in the current quarter, Dessai views these as crucial drivers for growth in the upcoming quarters.

 

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