More on Amazon Web Services


Synergy's estimates come shortly after AWS (AMZN) launched several new services for enterprises and developers at its re:Invent conference, covering fields as disparate as PC virtualization, app streaming, high-throughput storage, identity management, and data stream processing.

Following re:Invent, Evercore assigned AWS a $50B valuation, and predicted its sales would rise to $8.1B in 2015 from $3.5B in 2013.

The firm sees AWS' software marketplace, which allows apps to be used on a utility basis (Amazon gets a 20% cut), accounting for 13% of 2015 revenue, up from just 5% in 2013.

ReadWrite's Matt Asay thinks Evercore might be too conservative. He sees the rise of DevOps within enterprises (results in developers having more say in IT spending decisions) working to Amazon's advantage. "DevOps, it turns out, is very real. And DevOps loves Amazon."

Previous: Amazon dominates cloud infrastructure, app platforms a 4-way race

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Comments (12)
  • James Sands
    , contributor
    Comments (2725) | Send Message
     
    Impressive to say the least....
    27 Nov 2013, 11:57 AM Reply Like
  • Compute_This
    , contributor
    Comments (84) | Send Message
     
    I think Amazon's aggressive moves into the computing utility marketplace will ensure it remains one of the big three players in this market space over the next 5 years, along with Google and Microsoft. There may be room for others as well, in particular IBM -- but the high territory is Amazon's to lose at this point. Amazon has built quite a convincing moat of capacity and expertise, considering the ferocity of the competition in this area.
    27 Nov 2013, 12:59 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    When analysts start assigning valuations at 16 times revenues, you know the crash is coming.
    27 Nov 2013, 01:10 PM Reply Like
  • James Sands
    , contributor
    Comments (2725) | Send Message
     
    $50/$3.5 = 14xs
    $50/$8.1 = 6xs

     

    How do you get 16? Plus there are plenty of stocks trading at these levels today so it isn't far fetched to assign such valuations. Whether or not the price level for such valuation provides appreciation over time is debatable.

     

    What is your opinion on a company growing 200%, 100%, or 50% as far as a reasonable valuation? 2xs, 4xs, 6xs, 8xs.....I assume you are short tech as it relates to social and/or cloud as well?
    27 Nov 2013, 01:36 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Give me an example of a company with more than $3bn in revenues that trades at 14 times sales.
    27 Nov 2013, 01:50 PM Reply Like
  • James Sands
    , contributor
    Comments (2725) | Send Message
     
    Are we talking historical or forecast? I'm not sure how this relates to my comment. But how about Facebook as a first. How many companies with over $3 billion in revenue are estimated to grow 50% per year over the next couple of years? Facebook isn't.
    27 Nov 2013, 02:11 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    AMZN, FB, TWTR, LNKD, P, TSLA, etc. - these are all bubble stocks with wild valuations and unrealistic growth expectations. We have seen it before. This bubble will end like all the other bubbles before it.
    27 Nov 2013, 03:32 PM Reply Like
  • James Sands
    , contributor
    Comments (2725) | Send Message
     
    Ok......so what are realistic valuations for companies growing much more robustly than the mean based on actual historical trends? There actually are high growth companies that exist.....
    27 Nov 2013, 03:37 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Amazon's earnings are not growing. The moment Amazon tries to become more profitable, all this revenue growth will disappear.

     

    If you want to look at realistic valuations, see the valuation of Apple after it came up with iPhone, or after it released iPad. Or look at Samsung. Or at Wal-Mart in 1980-1990s. These companies never had multiples anywhere close to those of AMZN, FB, TWTR, P, etc.
    27 Nov 2013, 04:03 PM Reply Like
  • DanoX
    , contributor
    Comments (3578) | Send Message
     
    Tesla is a company that makes a physical product, those other companies have nothing to show for themselves other than nebulous hot air they are not the same.
    27 Nov 2013, 04:15 PM Reply Like
  • James Sands
    , contributor
    Comments (2725) | Send Message
     
    The comparison to Apple and Walmart is interesting. We can always look back to Microsoft, and Google, among some others. These companies represent some of the most amazing growth as well as solid margins and valuations. So pegging any company and expecting them to achieve similar growth multiples, margins, etc. is very unrealistic. 97% or more of companies will not grow like Google with the same margins and valuation over time.

     

    There is also no way to know that a company will be exceptional over the long-term during its early growth stages. Just look at Google's risk factors from its prospectus. What is key is to own companies at key levels based on growth expectations.

     

    I own LinkedIn as an example of one of the companies in my portfolio which would be heavily criticized by many as being a momo stock, highly overvalued etc. But my price is $74/share so based on this entry level I own a company with a TTM P/E at 250 and an enterprise value to sales at 4.8. The company also trades 52 times its TTM diluted free cash flow/share at this level. The company still has the potential to grow revenue on average around 30% over the next 5 years placing its potential revenue near $5-6 billion. My entry is at an enterprise value near $6.6 billion.

     

    Bottom line is that high growth companies have great returns for those willing to take the risks, and over time the winners will yield strong returns. Thus back to my initial questions, it is important to find an appropriate premium valuation early on during the growth stage. What this should be is an important discussion for those considering growth stocks.
    27 Nov 2013, 04:28 PM Reply Like
  • Jaka11
    , contributor
    Comments (30) | Send Message
     
    So, the eps should be going up ? Anyone raised estimates ?
    Or they are doing this for free too ?
    27 Nov 2013, 03:49 PM Reply Like
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