Reflection after a cloud attack? ›

Economic fears led to a selloff of tech stocks on Monday. Amazon stock (NASDAQ: AMZN) fell 3.28% to $ 111.75. In the meantime, you can still rely on a booming cloud business: on Tuesday, Amazon Web Services announced a comprehensive partnership with the world’s second-largest airline. Can the parade segment of the US group lead its share in the tough market environment without loss?

Known economic fears returned to Wall Street earlier this week and Amazon stocks were caught in a downtrend as well. The newspaper of the world’s largest online mail order company fell -3.28% to $ 111.75 on the Nasdaq on Monday.

While the stock split effect on US equities appears to be fading away in the tough market environment, the group’s cloud activity reliably provides a fresh boost.

The second largest airline in the world relies on the Amazon cloud

The e-commerce giant announced on Tuesday that Amazon Web Services (AWS) will become the cloud provider for Delta Air Lines. In terms of the number of jets, the main US carrier is the second largest airline in the world after American Airlines.

AWS will help Delta “unlock technology, streamline processes, deliver new digital travel services, improve customer service, and provide cloud-based training for employees worldwide.”

The airline is also building on Amazon’s portfolio to meet unique new industry and regulatory requirements.

Delta also remains Amazon’s preferred airline, supporting the company’s business travel needs around the world.

Weak core business and streaming

Cloud business is a bright spot for the e-commerce giant, which has been struggling with poor economic outlook and disappointing business results since the beginning of the year. In the first quarter, operating profit (EBIT) decreased by -58% compared to the same period last year to $ 3.7 billion. Although sales rose + 7% to $ 116 billion; however, the company saw the weakest growth in 20 years.

On the other hand, AWS was able to increase revenues between January and March by + 37% to $ 18.4 billion. The operating profit of the high-margin cloud platform also increased significantly: by approximately 55% to $ 6.5 billion. Thus, the segment has established itself as the most important profit generator of the Internet giant.

Forecasts for June also disappointed. Management recently announced sales of $ 116 to $ 121 billion, an increase of only 3 to 7%. Even red numbers for the operating result are possible: Amazon plans in the range of $ -1 to $ +3 billion.

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When does the target hunt begin?

However, analysts believe the weaknesses in its core and streaming activities are temporary. Out of 53 experts polled by Marketscreener, all but three recommend buying (37) or buying (13). The average target price is 57% above current levels.

I am also optimistic that the internet giant is able to meet macroeconomic and long-term challenges – mainly thanks to the dynamically developing business in the cloud. It ensures strong growth and fuels investors’ fantasies about going public. In my opinion, there would only be cause for concern if the engine started to jam in the parade segment.

However, I believe that the chances of an unpleasant surprise in this area are very low. Once the economic breath of Amazon stock is over, the hunt for price targets between $ 150 and $ 200 should begin.

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