Amazon's Cloud Growth Lags Behind Rivals
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy AMZN?
Source: Fool
- Market Share Decline: Amazon Web Services (AWS) reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a weakening competitive position in the cloud infrastructure market that could impact future leadership.
- Revenue and Profit Comparison: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, which is substantially higher than Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, highlighting AWS's profitability advantage, yet its growth rate lags behind competitors.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which may lead to negative free cash flow in 2026, but underscores the company's long-term commitment to its cloud business despite potential short-term financial strain.
- Stable Financial Performance: Amazon's quarterly revenue rose 14% to $213.4 billion in 2025, with operating income increasing 18% to $25 billion, indicating strong execution capabilities even as market reactions to its spending plans remain lukewarm, reflecting the company's resilience in financial performance.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AMZN is 294.69 USD with a low forecast of 250.00 USD and a high forecast of 340.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 222.690
Low
250.00
Averages
294.69
High
340.00
Current: 222.690
Low
250.00
Averages
294.69
High
340.00
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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Amazon's Cloud Growth Lags Behind Rivals
- Market Share Decline: Amazon Web Services (AWS) reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a weakening competitive position in the cloud infrastructure market that could impact future leadership.
- Revenue and Profit Comparison: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, which is substantially higher than Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, highlighting AWS's profitability advantage, yet its growth rate lags behind competitors.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which may lead to negative free cash flow in 2026, but underscores the company's long-term commitment to its cloud business despite potential short-term financial strain.
- Stable Financial Performance: Amazon's quarterly revenue rose 14% to $213.4 billion in 2025, with operating income increasing 18% to $25 billion, indicating strong execution capabilities even as market reactions to its spending plans remain lukewarm, reflecting the company's resilience in financial performance.
See More
Amazon's AWS Growth Lags Behind Competitors
- Market Share Decline: Amazon's AWS reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a potential erosion of Amazon's competitive edge in the cloud infrastructure market, which could impact its long-term leadership.
- Revenue vs. Expenditure: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, yet this pales in comparison to Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, suggesting that Amazon's profitability advantage may not offset its market share losses.
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Amazon Shares Drop: Amazon's shares fell by 10% in Frankfurt following the announcement of significant capital expenditures.
Impact of Results: The decline in stock price is attributed to investor reactions to the company's financial results and spending plans.
See More
AMAZON: Q4 OPERATING INCOME REFLECTS $730 MILLION IN ESTIMATED SEVERANCE EXPENSES AND $610 MILLION IN ASSET IMPAIRMENTS FROM PHYSICAL STORES - PRESENTATION
- Q4 Operating Income: Amazon's Q4 operating income includes an estimated $730 million in severance costs.
- Asset Impairments: The company reported $610 million in asset impairments related to physical stores.
See More
Amazon Faces Challenges from Tariffs
- Inventory Pressure: Amazon's inventory is depleting due to tariffs imposed by Trump, leading to higher acquisition costs for merchants, which may drive up prices in the marketplace and affect consumer purchasing decisions.
- Changing Consumer Behavior: CEO Andy Jassy noted that consumers are becoming more price-conscious, seeking bargains, which could lead them to shop at alternative retailers, potentially impacting Amazon's market share.
- Long-term Growth Prospects: Despite the challenges posed by tariffs, Amazon still possesses strong long-term growth potential, with a robust business model and solid cash flow that position it well to navigate economic slowdowns.
- Reasonable Market Valuation: With a market cap of $2.6 trillion, Amazon may seem expensive, but its forward P/E ratio of 29 indicates that the stock is not egregiously overvalued, making it a solid long-term investment choice.
See More
Amazon's Cloud Growth Lags Behind Rivals
- Market Share Decline: Amazon Web Services (AWS) reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a weakening competitive position in the cloud infrastructure market that could impact future leadership.
- Revenue and Profit Comparison: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, which is substantially higher than Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, highlighting AWS's profitability advantage, yet its growth rate lags behind competitors.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which may lead to negative free cash flow in 2026, but underscores the company's long-term commitment to its cloud business despite potential short-term financial strain.
- Stable Financial Performance: Amazon's quarterly revenue rose 14% to $213.4 billion in 2025, with operating income increasing 18% to $25 billion, indicating strong execution capabilities even as market reactions to its spending plans remain lukewarm, reflecting the company's resilience in financial performance.
See More
Amazon's AWS Growth Lags Behind Competitors
- Market Share Decline: Amazon's AWS reported a 20% growth in 2025, significantly trailing behind Google Cloud's 36% and Microsoft's Azure at 39%, indicating a potential erosion of Amazon's competitive edge in the cloud infrastructure market, which could impact its long-term leadership.
- Revenue vs. Expenditure: AWS added over $21.2 billion in revenue in 2025, achieving an operating income of $45.6 billion, yet this pales in comparison to Google Cloud's $13.9 billion and Microsoft's Azure's $19 billion, suggesting that Amazon's profitability advantage may not offset its market share losses.
- Capital Expenditure Plans: Amazon is targeting $200 billion in capital expenditures for 2025, primarily for AWS and AI workloads, which, while likely leading to negative free cash flow in 2026, demonstrates Amazon's long-term commitment to its cloud business despite short-term financial strain.
- Stock Price Reaction: Following its earnings report, Amazon's stock price fell despite meeting expectations, as investors reacted negatively to the $200 billion capex forecast, reflecting market concerns about the company's future growth potential amidst rising expenditures.
See More
Software Stocks Face Unprecedented Selloff Amid AI Concerns
- Software Stock Selloff: Wedbush analyst Dan Ives highlighted that Wall Street's selloff of software stocks like Salesforce, ServiceNow, and Microsoft is unprecedented, indicating severe investor skepticism about their relevance in the AI era, which could lead to declining performance over the next few years.
- Historic Decline: Ives noted that in his 25 years of experience, he has never witnessed such a structural selloff, with software companies being perceived as lacking space in the AI age, reflecting a significant drop in market confidence that could result in a loss of about 5% of customers.
- AI Impact Analysis: While Ives acknowledged that AI disrupts the software industry, he argued that considering software as obsolete is an extreme view, citing Palantir as an example of how software can still thrive in the AI era, demonstrating that there is still room for software to succeed.
- Market Reaction: The stock prices of Microsoft, Salesforce, and ServiceNow have dropped 16.75%, 25.87%, and 30.47% respectively over the past month, indicating a pessimistic outlook from investors regarding the future prospects of these companies and reflecting a waning confidence in the software sector.
See More
