Amazon.com, Inc. Focusing on Growth
Amazon.com, Inc. (NASDAQ:AMZN) stock has been in the limelight during the past few months for making new lifetime highs. Analysts are upbeat on the growth potential of the retail giant, which has recently announced its plans to open new convenience stores. AMZN stock has posted gains of about 42% in the past year, as compared to seven percent returns posted by the broader S&P 500.
Last week, Amazon stock had gained on the news of its cloud computing unit partnering with VMware, Inc. (NYSE:VMW). The joint cloud computing service shall be called “VMware Cloud” and it will be on “Amazon Web Services.” This is likely to prove a strong competitor to “Microsoft Azure.” This partnership is significant, as the move toward hybrid cloud replaces the old data centers. Amazon’s focus on new growth areas has meant more gains for AMZN stock.
With this new service, the companies now have the choice of running their operations on both their own VMware-equipped data centers and Amazon’s web-based servers. The deal strengthens Amazon in its competition with other cloud service providers like Alphabet Inc (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), and Microsoft Corporation (NASDAQ:MSFT). (Source: “Amazon Partners With VMware to Extend Its Computing Cloud,” The Wall Street Journal, October 13, 2016.)
The new alliance shall provide what is called hybrid-cloud, which lets the companies take advantage of the cloud without leaving their own data centers. Hybrid cloud computing is what makes Microsoft Azure different from the rest and, by following this path, Amazon has the potential to eat into the share of Microsoft. This is positive for Amazon stock in the long term.
Most analysts are bullish on AMZN stock, which enjoys a consensus rating of “buy.” The average target price hovers around $900.00, but most analysts are now moving toward the $1000.00 mark. Last week, Cantor Fitzgerald & Co Inc raised Amazon’s stock price target to $1000.00 from $835.00. Jefferies Group LLC (NYSE:JEF) has a price target of $950.00, Cowen and Company, LLC has a target of $960.00, and Oppenheimer Holdings Inc. (USA) (NYSE:OPY) has a target of $941.00 for the stock. (Source: “Another firm raises Amazon’s price target to $1000,” MarketWatch, October 12, 2016.)
The sentiment for AMZN stock is upbeat on the strong growth in Amazon Web Services, together with the huge popularity of “Amazon Prime” service. Although the retail giant Wal-Mart Stores, Inc. (NYSE:WMT) has been upping its e-commerce game, it is very unlikely to catch up with Amazon.com, which has initiatives in many high-growth areas.
As investors look forward to another strong set of quarterly numbers later this month, Amazon stock is likely to remain buoyant.