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How Amazon’s AWS is Capitalizing on the AI Trend

Daniel Kim Views  

Analysts predict a favorable stock trend for Amazon.com, Inc. as its AWS (Amazon Web Services) sees a revival in its sales growth rate, backed by strong performance in the e-commerce sector.

Kim Myung Joo, a researcher at Korea Investment Securities, said, “In 2022, when concerns about the global economic slowdown were high, Amazon’s AWS sales growth rate decreased, which acted as a factor in Amazon’s stock slump. However, from the second quarter of 2023 on, Amazon’s AWS sales growth rate is rising again due to the gradual recovery of the U.S. economy and increased IT investment by corporations.”

The recent surge in interest in generative AI, with many companies using cloud services to develop these technologies, has contributed to Amazon’s rebounding AWS sales growth rate.

Furthermore, Amazon’s e-commerce business, which saw a decline in sales in the first quarter of 2022, has recently achieved favorable results. Since 2023, Amazon has subdivided its delivery regions to improve delivery speed and lower unit costs. Thanks to these delivery network efforts, Amazon has lowered delivery costs and proceeded with faster delivery.

Kim stated, “This is why Amazon’s e-commerce business sales have been able to recover steadily,” “The profitable advertising division is also maintaining steady sales growth,” he added. As a result, the operating profit margin of the business divisions, excluding AWS, recorded 5.0% in the first quarter of this year.

Despite recent market concerns, the U.S. economy is exhibiting positive trends. However, the trading-down phenomenon persists, with consumers favoring mid- to low-priced products. This trend favors Amazon, which is known for its price competitiveness in the e-commerce market.

Researcher Kim said, “The advancement and popularization of generative AI technology is a global trend. Therefore, Amazon’s AWS business is expected to continue stable sales growth.” He also advised, “It is necessary to keep an eye on Amazon, which is led by AWS and pushed by e-commerce.”

Daniel Kim
content@viewusglobal.com

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