Prognosis: Amazon Shares Set to Skyrocket in Coming Half Decade. One Key Factor Explained.
Amazon's cloud computing segment, Amazon Web Services (AWS), continues to be a significant contributor to the company's overall growth and profitability. With the cloud computing market projected to reach $2.26 trillion by 2030, AWS is well-positioned to capitalise on this growth.
One of the key growth drivers for AWS is its market position and competition. As the world's largest cloud provider, AWS faces increasing competition from Microsoft Azure and Google Cloud. To maintain its position, AWS needs to stem market share losses and leverage new technologies like AI.
Revenue growth is another key driver for AWS. In 2024, AWS generated $107.6 billion in sales. While its growth rate is slower than some competitors, it remains a crucial revenue source for Amazon. The bull case scenario suggests an 18% compounded annual growth rate (CAGR) through 2030 if AWS effectively leverages AI and stabilises its market share.
Amazon has earmarked significant investments in AI-centric data centers to support workload growth, particularly in Platform-as-a-Service (PaaS), which is expected to grow rapidly due to technologies like container orchestration and serverless computing.
The cloud computing market, including AWS, is expected to benefit from advancements in AI, PaaS, and hybrid cloud architectures. The shift towards hybrid cloud approaches could potentially lead to Amazon's stock soaring over the next five years and beyond.
AWS sales increased by 17% year over year in the 2025 first quarter, accounting for 63% of the company's total operating income during this period. As the largest cloud provider, Amazon has the most to gain from the shift of IT spend to the cloud, with CEO Andy Jassy expecting 85% of company information technology (IT) spend to move to the cloud over the next 10 to 20 years.
With 90% of companies anticipated to adopt a hybrid cloud approach by 2027, AWS, with its robust and competitive generative AI platform accessible through AWS, is likely to capture a significant percentage of the increased cloud spend.
Amazon's stock has been a significant wealth builder for long-term investors, and the anticipated shift towards hybrid cloud approaches could further reinforce Amazon's dominant position in the market. Microsoft Azure currently holds a market share of 21%, making Amazon the leader in the global cloud market.
In conclusion, AWS has substantial growth potential in the cloud computing sector, driven by technological advancements and strategic investments. However, it must address competitive challenges to sustain this growth. Nonetheless, with its robust AI platform, significant investments in AI-centric data centers, and strategic position in the market, AWS is well-positioned to capitalise on the growing cloud market and continue its growth trajectory.
- To maintain its competitive edge in the cloud computing market, Amazon is investing heavily in AI-centric data centers, focusing on technologies like Platform-as-a-Service (PaaS), which is projected to grow rapidly due to advancements in container orchestration and serverless computing.
- The adoption of hybrid cloud approaches by businesses could potentially lead to an increase in Amazon's stock value over the next five years and beyond, as this shift towards hybrid cloud could account for 85% of the company's information technology (IT) spend moving to the cloud over the next 10 to 20 years.
- With 90% of companies anticipated to adopt a hybrid cloud approach by 2027, AWS, with its robust and competitive generative AI platform accessible through AWS, is likely to capture a significant percentage of the increased cloud spend, leveraging new technologies to capitalize on the growing cloud market and continue its growth trajectory.
