Home Business Buy Amazon Stock Because Its Cloud Business Will Soar, Analyst Says – Barron’s

Buy Amazon Stock Because Its Cloud Business Will Soar, Analyst Says – Barron’s

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shares will rise because of to its market leadership in cloud-computing, according to Jefferies.

The back story. Amazon stock (ticker: AMZN) has dropped nearly 10% since the e-commerce giant reported mixed financial results last month for the quarter ended in June, which included an earnings miss. The company reported adjusted second-quarter earnings per share of $5.22, below the $5.56 Wall Street consensus.

Even so, revenue of $63.4 billion beat expectations of $62.5 billion, and, more broadly, Amazon stock has risen about 18% this year.

What’s new. Jefferies analyst Brent Thill reiterated his Buy rating for Amazon stock on Tuesday, predicting strong sales growth for its Amazon Web Services, or AWS, business.

“AWS remains the dominant Cloud player, set to capture the majority of forward industry growth as the de facto infrastructure provider,” he wrote. “We believe AWS would be worth [$300 billion to $400 billion] as a standalone company.”

Amazon shares were down 3.3% to $1,763.38 near midday Tuesday. The
Nasdaq Composite
was down 2.8%.

The analyst cited Gartner forecasts, which predict the cloud-computing market will grow to $315 billion in 2023 from $135 billion last year. Thill estimates Amazon will generate $35 billion in cloud revenue this year, more than double its No. 2 competitor


Looking ahead. The analyst reaffirmed his $2,300 price target for Amazon shares.

Write to Tae Kim at tae.kim@barrons.com

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