Amazon’s (AMZN) shares have surged 16.1% this year, outperforming the Zacks Internet Commerce industry profitability of 11.1%. The e-commerce giant is leveraging its cloud computing division, Amazon Web Services (AWS), which has seen strong momentum. AWS has been enhancing its generative AI capabilities and recently partnered with SAP to accelerate the implementation of generative AI for various companies. The collaboration with SAP allows AWS to incorporate generative AI solutions into ERP applications, expanding its generative AI hub. This partnership has made AWS the first certified cloud provider to support SAP’s portfolio and strengthen its clientele.
The global generative AI market is forecasted to reach $191.8 billion by 2032, with a CAGR of 34.1% between 2023 and 2032. AWS is well-positioned to capitalize on this growth, with Amazon Bedrock offering seamless access to high-performance core models. The collaboration with NVIDIA and the availability of Blackwell GPU platform on AWS will enhance inference workloads for multi-billion parameter language models.
AWS’s expanding clientele, in addition to its generative AI capabilities, cloud solutions, data center network, and growing AWS Regions and Availability Zones, are driving its customer base growth. Partnerships with companies like NinjaTech AI, CrowdStrike, Brightcove, and BlackBerry have further expanded AWS’s customer base and are expected to boost its revenue. In the first quarter of 2024, AWS generated revenue of $25.04 billion, accounting for 18% of total sales, and grew 17% year over year.
Amazon’s overall performance is expected to benefit from AWS’s strength, with a Zacks rank of #3 (Hold). The Zacks Consensus Estimate for 2024 revenue stands at $638.24 billion, indicating an 11% year-over-year growth. The expanding clientele will help AWS maintain its dominant position in the global cloud market, competing with Microsoft and Alphabet’s Google. Amazon holds a significant share of the global cloud provider market, with Microsoft and Google also experiencing growth in their cloud services revenue.
Overall, Amazon’s focus on generative AI, expanding global presence, and capabilities in various sectors make it a strong investment option for investors. With a Value Score of B, Amazon is positioned to capitalize on the growing demand for Artificial Intelligence, Machine Learning, and the Internet of Things. With a projected growth in the semiconductor market, Amazon’s partnership with NVIDIA and focus on generative AI will contribute to its future success.
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