In this weekend’s Barron’s column, writer Tiernan Ray gushes over Amazon.com, Inc. (NASDAQ:AMZN)‘s other business outside of its e-commerce segment, AWS. Specifically, Ray writes that ‘Amazon Web Services, known as AWS, is changing the entire landscape of technology’ with many start-up and established tech companies using AWS for various IT infrastructure needs because it saves time and considerable initial capital outlays. The implication of this trend according to Tiernan Ray is that, ‘Amazon will increasingly attract customers like Snap and Twilio, reinforcing the value of its cloud-computing empire’. Given that self-reinforcing cycle, analyst Pierre Ferragu believes that Amazon and Alphabet Inc (NASDAQ:GOOG), which is currently a distant second, could form a natural duopoly, where the two compete but keep other competitors out.
What Does The Smart Money Sentiment Say?
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According to our data, the smart money was less optimistic in Q4 than in Q3. Of the 742 elite funds in our database, 123 had a bullish position in Amazon.com, Inc. (NASDAQ:AMZN) at the end of December, down 27 funds from the previous quarter. Ken Fisher’s Fisher Asset Management inched up its stake by 2% to just over 2 million shares.
The Bottom Line
Barron’s believes the fast growing and profitable cloud business could eventually become a duopoly, with Amazon’s AWS unit being one of the prime winners. If that happens, AWS margins could be stronger-than-expected and the ‘race to zero’ could be a slower/non-existent one. If AWS continues to shine, Amazon’s stock could continue to deliver in the long run. For more Amazon reading, check out this interesting article on 10 Cool Tech Gifts and Gadgets to Buy on Amazon Under 100 Dollars.