Amazon’s AWS Results Give Rivals Cause to Worry

Amazon (AMZN) has questioned the doubts about its ability to continue business growth and large-scale cloud computing. The company said revenue from AWS (Amazon Web Services) increased 55% year over year (or every year) to $ 3.23 billion 3T16. The results easily exceed that required for the expected revenues of $ 3.170 billion for the cloud industry.

$ 10 billion in sales                                                                    

The vertical axis shows the trend of AWS sales growth in the last five quarters. Amazon AWS expects revenues to reach $ 10 billion this year. In addition, revenue growth, margins in the Amazon cloud business improves. The company said operating profit margin rose to a record high of AWS 32% during the last quarter. The operating profit margin distribution of the clouds was 30% the same quarter last year.

The strong growth in AWS is a challenge to Microsoft (MSFT), Alphabet (GOOGL) and International Business Machines (IBM), because it means that they are more backward than the Amazon cloud in the battle in the IT market. Another cloud provider is struggling to steal market share of Amazon cloud computing is Oracle (ORCL). Because the AWS has become higher, some analysts have predicted that growth would slow down, but the last quarter is rejected Amazon these predictions.

Amazon has managed to surpass the expectations of growth in spite of its cloud division reports earlier this year that Apple (AAPL) has reduced its exposure to the AWS accept some operations to the cloud with Google Cloud alphabet.

Growth opportunities remain very important in the field of cloud computing, because the business transition to the cloud is still in its infancy.

3T16 earnings expectations

Overall, Amazon reported EPS (earnings per share) of $ 0.52 on revenue $ 32.7 billion 3T16 half. Although the result improved from the previous year, EPS could not reach consensus estimate, which called for $ 0.78. The consensus earnings forecast of 32.7 billion. Amazon seeks income between $ 42 billion $ 45.5 million on 4T16 against the consensus estimate of $ 44.6 billion.