© Reuters. Some Macro Clouds “Set Up” for Amazon Web Services (AMZN) – Jefferies
By Sam Boughedda
Jefferies said on Friday that “some macro clouds are moving” for Amazon (NASDAQ:) AWS.
Analysts, who have a buy rating and price target of $165 per share on Amazon, told investors the company hosted three Amazon Web Services experts, including an IT strategy consultant, a cloud architect in a consulting VAR and a startup founder who previously worked at AWS.
“Our experts unanimously agreed that AWS is the leading public cloud provider with a significant gap to Azure, its closest competitor. AWS’s lead is largely the result of its advantage in first mover, and our experts see no sign of AWS losing ground. A year ahead means it has more scale, more revenue and profits, allowing it to reinvest billions into AWS every year more customer referrals and more trained developers who know the platform,” the analysts explained.
They added that AWS is the “easy and safe choice” for large enterprises and start-ups, with large enterprise IT buyers having AWS as their default choice. However, they added that “cloud adoption has slowed as macro storm clouds move.”
“All 3 experts pointed to a slowdown in cloud adoption due to a macro slowdown. Our IT consultant noted that IT costs are under scrutiny and macro pressures may last well into 2025. Our VAR expert noted that low-hanging fruit is the highest priority, with more than 6-8 month projects pending.He first observed a slowdown in demand 6-8 months ago, and does not expect demand to pick up again until Q2-Q3 23 once budgets become clearer Our startup founding expert is preserving cash and using AWS wherever he can instead of non- AWS more expensive. It still expects infrastructure to have to double next year, but hopes to find compute efficiencies to offset the additional costs,” the Jefferies analysts continued.
Despite macro pressures, Jefferies believes cloud budgets are relatively protected because although there is increased cost oversight, “cloud projects may fare better than other budget lines.”