Analyst: Amazon Cloud Unit Could Hit $3T in Value

AWS, Amazon Web Services

Amazon’s cloud storage unit Amazon Web Services (AWS) could be headed to a value of $3 trillion, nearly three times what the entire company is worth.

That’s according to Alex Haissl, a Redburn Ltd. analyst quoted by Bloomberg News Wednesday (June 29). Haissl also said AWS has grown so powerful that Amazon could someday split it off from its retail division.

“Separating AWS may not be on the table for now, but if the performance gap versus the non-AWS parts continues to widen, it could be on the table further down the road,” Haissl wrote.

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He suggested buying Amazon shares and projected its stock will hit $270 in the next year, the highest target on Wall Street and 150% above Tuesday’s closing price. AWS revenue rose 37% to $18.4 billion in this year’s first quarter as its eCommerce sales lagged.

“There is no sugar coating the weak performance” of online retail, Haissl said, adding that “we do not think the business is structurally broken.”

He also argued AWS is better positioned than its Google and Microsoft-owned competitors, with fewer costs and superior technology, and said the company will contribute all of Amazon’s earnings for the year and just 20% of its revenue.

Bloomberg analyst Anurag Rana estimated AWS’ value is $1.5 trillion to $2 trillion and argued that Microsoft is better positioned to win the cloud battle, as it has a stronger grounding in on-site IT infrastructure than Google and Amazon.

PYMNTS noted in April that both Amazon’s and Microsoft’s cloud businesses could be facing more scrutiny in the European Union following the adoption of the Digital Operational Resilience Act (DORA), which is set to go into effect next year.

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Earlier this month, AWS announced the rollout of AWS IoT TwinMaker, which makes it faster and easier for developers to “create digital twins of real-world systems like buildings, factories, industrial equipment and production lines — helping more customers build applications that improve operational efficiency and reduce downtime.”