In a recent research paper it was noted that Amazon’s main sectors – online consumer spending and cloud computing – are enjoying a surge, launching the company’s shares to a multi-year high. The surge is largely down to the rapid digital advancements reflected in robust e-commerce activity and increased demand for cloud technology.
Wall Street data indicates a rejuvenation of Amazon’s cloud computing division, Amazon Web Services (AWS), combined with strong online consumer expenditure. This uplift is contributing to robust revenue inflows for AWS, and has also rippled through to Amazon’s retail sector, suggesting a thriving climate for online businesses.
The latest AWS customer survey anticipates a potential increase of 20% in AWS expenditure in 2024 compared to the previous year, indicating a bigger focus on infrastructure spending in future budget plans of companies. The survey also revealed a strong leaning towards data-centric services of AWS, indicating an increased awareness of the value of data in operational activities.
Analysts point out the benefits AWS is reaping from companies choosing cloud computing contracts and shifting their data to the cloud instead of traditional data centers. Businesses find it advantageous to run artificial intelligence (AI) projects effectively on the cloud.
Surge in Amazon’s cloud sector earnings
Consequently, these trends bode well for AWS, positioning it as an increasingly favored option in the competitive cloud computing market.
Positive growth signs within AWS resonate with the generally optimistic prediction for the cloud sector in 2024. AWS is a major profit source for Amazon and exhibits signs of recovery in the cloud sector following a slowdown since 2022. AWS generated a 13% growth in revenue in Q4 compared to the same period in the previous year. This upward trajectory is indicative of the resilience of the cloud sector.
Amazon continues to enjoy a resurgence in cloud expenditures, despite Microsoft Azure and Google Cloud reporting impressive Year-on-Year revenue growth of 30% and 26% respectively. Forecasts for 2024 are encouraging for investors, suggesting that Amazon shares are expected to appreciate further in value.
AWS CEO Adam Selipsky remarked on the growth and emphasized that companies are now focusing on infrastructure, an area where AWS holds a strong position. He sees the demand for AWS services booming, indicating a promising future for AWS in the infrastructure investment domain.
