Investors are increasingly focusing on Amazon Web Services (AWS) due to its significant contribution to Amazon’s profits. During the last earnings call, Amazon’s leadership highlighted that AWS is expected to receive a substantial revenue boost from its AI business, which is growing at a triple-digit percentage year-over-year. Capacity constraints related to AI chips and server components are anticipated to ease in the second half of the year, potentially accelerating growth.
While Amazon’s retail segment may face challenges due to tariffs, analysts are concerned about a broader spending slowdown impacting AWS’s revenue. Investors are also comparing AWS cloud services with Microsoft’s Azure, which was a key focus when Microsoft released its earnings report.
According to Flexera, the competition for the top cloud provider is primarily between AWS and Azure. For small and medium-sized businesses, AWS remains the preferred choice for public cloud workloads, with 77% of organizations utilizing AWS.
Goldman Sachs remains optimistic about Amazon’s long-term potential despite near-term margin pressures. The bank estimates Amazon will generate $154.5 billion in revenue. Bank of America also anticipates strong first-quarter results, predicting net sales of $155.5 billion.
CFRA expects Amazon to surpass first-quarter estimates with $155.2 billion in revenue, attributing this to a weak dollar, consumption spikes, and faster growth in advertising, cloud, and subscriptions. However, Deutsche Bank advises caution for the remainder of the year due to macroeconomic uncertainties.
Amazon CEO Andy Jassy mentioned that third-party sellers might raise prices due to tariffs, affecting both retail and advertising segments. Bernstein estimates a potential 1%-4% negative impact on Amazon’s global revenues from tariff and macroeconomic scenarios.
— new from Business Insider