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It's a big week for Amazon's (AMZN) massive e-commerce business, with Cyber Monday set to test the strength of consumer spending. But for Amazon stock, the bigger story is the tech giant's Las Vegas convention for its cloud computing business.
Amazon Web Services annual re:Invent conference gets started today, with Wall Street looking for updates on Amazon's approach to artificial intelligence. The tech giant announced a new service ahead of the event called AWS Interconnect that allows "resilient, high speed private connections to other cloud service providers." Google Cloud is the first partner, with Microsoft (MSFT) set to join next year, according to the announcement. Meanwhile, a Wall Street analyst raised their Amazon stock price target in a note to clients Monday, citing AWS' momentum.
In a joint blog post, the two rival cloud giants said organization are increasingly relying on multiple cloud providers but face challenges in syncing up.
"Previously, to connect cloud service providers, customers had to manually set up complex networking components including physical connections and equipment; this approach required lengthy lead times and coordinating with multiple internal and external teams," the Google and Amazon blog post said.
"This could take weeks or even months. AWS had a vision for developing this capability as a unified specification that could be adopted by any cloud service provider, and collaborated with Google Cloud to bring it to market."
The new offering comes as regulators in the European Union and elsewhere are reportedly concerned about the dominance of the so-called Big Three in cloud computing: Amazon, Microsoft and Google. Google last week dropped an EU anti-competitiveness complaint against Microsoft, which originally accused Microsoft of making it difficult to shift computing workloads from its Azure service to other providers.
Amazon Price-Target Hike
Meanwhile, analysts with Oppenheimer raised their price target for Amazon stock to 305 from a previous 290 while reiterating an outperform rating. Oppenheimer analyst Jason Helfstein cited commentary from Amazon Chief Executive Andy Jassy that AWS was rapidly expanding its capacity through building new data centers to meet AI-related demand.
"AWS planning to double capacity through 2027 after having doubled since 2022, with 'at least' 1 GW (gigawatt) added in Q4," Helfstein wrote to clients. "Our analysis suggests roughly $3 billion historical revenue per incremental GW. Applying this to the forward GW forecast with pricing discounts suggests 14%/22% upside to Street 2026/2027 AWS revenue, including 3% upside in Q4."
Amazon's re:Invent conference comes as Wall Street is still fiercely debating the tech giant's positioning to win AI-related cloud contracts. AWS is the largest cloud provider by market share but is facing challenges from Microsoft and Google, as well as Oracle (ORCL) and other smaller so-called neocloud providers. The large language models that power AI application require massive amounts of computing power to train and then operate, offering a big market for cloud computing providers.
Google has particularly strong momentum, following a debut for its Gemini 3 model that excited Wall Street. A report last week that Facebook parent Meta Platforms (META) is interested in using Google's custom AI chips added to that momentum.
AWS posted its best sales growth since 2022 with its third-quarter results in late October, so its re:Invent conference offers a chance for Amazon to further show it can defend its turf in the cloud.
Amazon Stock Trades Flat
On the stock market today, Amazon stock is ahead a fraction at 233.89 in morning trades. Google stock is down more than 1% at 316.37. Shares of the search giant surged 14% in the final two weeks of November.
Amazon stock is ahead roughly 6% year-to-date, helped by a 5.5% rally last week.
Shares jumped in late October after the tech giant posted stronger-than-expected Q3 results. But a broader slump for AI-related stocks has wiped out rally. Shares hit a November low of 215.18 on Friday, just above Amazon's 200-day moving average, before bouncing back.
Meanwhile, Amazon stock holds an IBD Composite Rating of 90 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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