Amazon
’s
AMZN
first-quarter 2021 results, which are scheduled to be released on Apr 29, are likely to reflect gains from its strengthening cloud service offerings.
The cloud computing division, Amazon Web Services (“AWS”), dominates the cloud market on the back of its growing adoption and popularity. This is anticipated to get reflected in the company’s first-quarter results.
We note that solid momentum across AWS has been aiding Amazon in generating high margins from the cloud business. The trend is expected to have continued inthe to-be-reported quarter.
AWS revenues were $12.7 billion, accounting for 10% of net sales in fourth-quarter 2020, rising28% year over year. We further note that AWS’s operating income improved 37.3% from the year-ago quarter to $3.6 billion.
We believe that an expanding customer base and a strong discount offering for long-term deals are likely to have driven the AWS topline in the quarter under review.
The Zacks Consensus Estimate for first-quarter 2021 AWS net sales is projected at $13.1 billion, indicating an improvement of 28.1% from the year-ago quarter’s reported figure.
Click
here to know how the company’s overall first-quarter results are likely to be.
Factors to Consider
Amazon’s consistent efforts toward the expansion of AWS product and services portfolio are likely to have helped it maintain dominance in the highly competitive cloud market over
Microsoft
’s
MSFT
Azure,
Alphabet
’s
GOOGL
Google Cloud and
International Business Machines
’
IBM
cloud division, to name a few, in the to-be-reported quarter.
In the first quarter, Amazon expanded the cloud services portfolio by unveiling and making several AWS services generally available. The initiatives are likely to have driven AWS’ssales in the quarter under review.
Further, the impacts of its strengthening data center network, and the growing number of regions and availability zones are expected to get reflected in AWS’s first-quarter results.
Notably, the company launched a second full region in Japan — the AWS Asia Pacific (Osaka) Region — in the quarter under review.
Expanding Clientele: Key Catalyst
In the to-be-reported quarter, PGA TOUR— commonly known as TOUR — selected AWS as its official cloud provider. AWS has been serving as TOUR’s Artificial Intelligence (AI) cloud provider, Deep Learning cloud provider, and Machine Learning (ML) cloud provider.
Apart from this, National Hockey League (“NHL”) partnered with AWS to make the latter its official cloud, AI and ML infrastructure provider.
Continuous additions to the AWS customer base, driven by Amazon’s cloud portfolio strength, are likely to have driven growth in AWS sales in the first quarter.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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