Cloud Computing Giants Outshine SpaceX IPO Prospects
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 20 hours ago
0mins
Source: Fool
- Cloud Market Growth: The big three cloud giants, Amazon, Microsoft, and Google Cloud, are projected to increase data center capital expenditures to $650 billion by 2026, reflecting strong demand driven by AI, which will enhance long-term revenue growth and market share.
- Investment Return Potential: Amazon and Microsoft's operating cash flow appears historically cheap, while Alphabet's valuation, though higher, remains reasonable, indicating strong investment value during capital expenditure cycles that attract investor interest.
- SpaceX Valuation Comparison: SpaceX's adjusted EBITDA for 2025 is $6.6 billion, with a current market cap of $2.5 trillion, resulting in a price-to-adjusted EBITDA ratio of 379, significantly higher than the cloud giants, indicating that its growth potential needs time to materialize.
- Long-term Investment Recommendation: Given the stable growth and reasonable valuations of the cloud giants, they are expected to outperform SpaceX significantly over the next decade, making them a more attractive investment choice for higher returns.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
44 Analyst Rating
41 Buy
3 Hold
0 Sell
Strong Buy
Current: 244.390
Low
175.00
Averages
280.01
High
325.00
Current: 244.390
Low
175.00
Averages
280.01
High
325.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI Investment: Amazon is spending $200 billion on artificial intelligence, with CEO Andy Jassy noting that as computing power increases, customer demand rises, suggesting a multi-year growth cycle ahead.
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See More
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See More
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See More
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- Oil Price Fluctuations: Following the sanctions relief, oil prices have slid below $80, reflecting market optimism about future supply and potentially impacting global energy market stability and investor confidence.
- Tech Stock Decline: Despite positive news regarding Iran, the S&P 500 and Nasdaq fell as major tech stocks tumbled, with Alphabet, Amazon, Meta, and Microsoft seeing losses between 2% and 5%, indicating market concerns over tech valuations.
- SpaceX Financing Plans: Shortly after its IPO, SpaceX announced plans to raise up to $20 billion through an unsecured notes offering, even as its stock price slumped 16% for three consecutive days, wiping out $400 billion in market cap, which could affect its future capital structure and market performance.
See More
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- Communication Services Sector Decline: The S&P Communication Services sector fell nearly 4% on Monday, with Netflix shares plummeting almost 6%, down 45% from last June's peak, highlighting significant challenges facing the industry.
See More
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- Oil Price Volatility: Oil prices initially surged over 2% after Iran threatened to close the Strait of Hormuz, but later retreated due to reported progress in peace talks with the US, highlighting the direct impact of geopolitical tensions on market dynamics and prompting investors to reassess energy sector risks.
- Market Expectation Shift: The market is currently pricing in a 39% chance of a 25 basis point rate hike at the upcoming FOMC meeting, reflecting a cautious investor sentiment towards future monetary policy, which could influence market liquidity and investment strategies.
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