Amazon.com, Inc.(NASDAQ:AMZN): Ready To Dominate The Cloud

Share This Article
October 1, 2013 9:49am NASDAQ:PNQI NASDAQ:QQQ

cloud computing: According to a recent Wall Street Journal article, cloud-based computing is the fastest expanding business at Amazon.com, Inc.(NASDAQ:AMZN). They call it AWS (Amazon Web Services). Amazon doesn’t break out separate numbers for its


AWS but Macquarie estimates revenues at $2.1 billion this year and is expecting an 81% increase year over year. 81%!

And by the end of the decade, Macquarie’s estimates revenues in the $15 to $20 billion range by the end of the decade.

Amazon’s CEO said in the Journal article that AWS is still in its infancy but he expects it to be at least as big as the company’s retail numbers.

That doesn’t mean much until you understand that the retail portion does 20 times as much in revenues as the AWS. 20 times!

That makes even the generous Macquarie estimates look to be off by as much as half.

But the best part of this story is that Amazon is undercutting its cloud competition in the same way it does its retail; razor thin margins.

Google shows a 32% margin and Rack Space 12% while AWS’s margin is 1.8%. And AWS has cut prices 23 times since its roll out and expects more price cuts as the technology evolves.

I’m glad I don’t have to compete with this type of pricing pressure. There is no one who can wage a price war like Amazon. Expect AWS to be a huge producer.

by Steve McDonald, Bond Strategist, The Oxford Club

Investment U provides cutting-edge research and strategic financial recommendations for all levels of investors through its morning publication Investment U Daily and its related publications.

The following ETFs hold “Amazon.com and have the exposures noted. You can sort any column of data by clicking on the heading.


 

Composite Ticker  ↑↓ Weighting   ↑↓
PNQI 8.15%
FDN 7.7%
XLY 6.23%
IYC 4.75%
VCR 4.42%
QQQ 3.98%

 

 


5 WINNING Stock Chart Patterns

Read Next



Free Investing Ideas Newsletter!

Join over 70,000 investors who get the latest insights and top rated picks from our free investment newsletter.

Most Popular



7 Best ETFs for the NEXT Bull Market

Explore More from ETFDailyNews.com

Free Investment Newsletter

Join over 70,000 investors who get the latest insights and top rated picks from our free investment newsletter.

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories