Amazon Cloud Business Dominates Public Cloud Market

Strategic Insights

May 3, 2015 — 1 min read

Amazon's web services business, Amazon Web Services (AWS), is continuing to grow rapidly, outperforming the company's e-commerce business and dominating the public cloud market. As of Q1 earnings, AWS reported a 49% increase in revenue to $1.57 billion, with an operating profit margin of 17%. This growth has led Oppenheimer analyst Jason Helfstein to raise his price target on Amazon stock to 525 from 415, citing AWS as a near-term catalyst for the stock.

Key Takeaways:

Amazon Web Services (AWS) reported a 49% increase in revenue to $1.57 billion in Q1, with an operating profit margin of 17%.
AWS is dominating the public cloud market, with 31% market share, according to Goldman Sachs' cloud computing research report.
Oppenheimer analyst Jason Helfstein raised his price target on Amazon stock to 525 from 415, citing AWS as a near-term catalyst for the stock.
AWS' growth is expected to continue, driven by strong demand and stable pricing, with revenue acceleration in Q2.
Goldman Sachs notes that Microsoft continues to be the fastest-growing competitor in the public cloud market.
Amazon entered cloud computing to efficiently utilize its massive e-commerce infrastructure, alongside other cloud service rivals Google and Microsoft.

Statistics:

AWS revenue increased 49% to $1.57 billion in Q1, according to Amazon's Q1 earnings report.
AWS operating profit margin was 17% in Q1, according to Amazon's Q1 earnings report.
Goldman Sachs estimates AWS has 31% market share in the public cloud market, up from 29% last quarter.
Oppenheimer analyst Jason Helfstein raised his price target on Amazon stock to 525 from 415.
Amazon stock price was over 1% higher in early trading on the day the report was published, reaching $428.

Sources:

Oppenheimer research note, quoted in Investor's Business Daily, April 2015
Goldman Sachs cloud computing research report, published Monday, April 2015
Amazon's Q1 earnings report, April 2015
Investor's Business Daily, copyright 2015 Investor's Business Daily, Inc

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