Cloud Services Growth Unlikely to Boost Amazon

| About:, Inc. (AMZN)

In addition to its book and general merchandise divisions, Amazon (NASDAQ:AMZN) provides cloud-based computing and data storage services to corporate customers. It competes with Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOG) in this market. We currently have a Trefis price estimate of $107 for Amazon’s stock, about 18% below the current market price of $130.

Trefis members have created forecasts for one key driver of Amazon’s stock over the last week: (1) Cloud and Other Web Services Revenue. These forecasts trend in line with the baseline Trefis estimate.

Amazon’s stock is not very sensitive to revenue from cloud and other web services, which constitute around 3% of our price estimate. See below for a chart showing recent Trefis member estimates for this driver.

1. Cloud and Other Web Services Revenue

The average of Trefis member forecasts for Cloud and Other Web Services Revenue are in line with our estimates. The baseline Trefis estimate predicts that cloud/web services revenue will increase from $900 million in 2010 to $2.80 billion by the end of the Trefis forecast period. In the past, cloud/web services revenue increased from $100 million in 2003 to $700 million in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Amazon’s stock to revenue from cloud and other web services.

You can see the complete $107 Trefis price estimateAmazon’s stock here.

Disclosure: No positions