uploads///AWS Revenue Growth

Amazon Web Services: Amazon’s Money Churner in 3Q15


Oct. 26 2015, Updated 9:07 a.m. ET

AWS continues to grow

Amazon’s (AMZN) cloud computing arm, Amazon Web Services (or AWS) surprised investors with its contribution to the overall revenue for Amazon.

The cloud computing segment of Amazon reported revenue of $2.1 billion in 3Q15. The revenue growth for AWS in 3Q15 is 78% year-over-year. In comparison, AWS revenue grew by 82% in 2Q15.

AWS operating income for 3Q15 accounts to $521 million which almost equals to Amazon’s operating income for entire North America e-commerce business worth $528 million.

Huge growth potential in Amazon Web Services

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AWS aims to leverage the fast-growing cloud services market. According to a report from IDC (International Data Corporation), the public IT cloud services market should grow from $56.6 billion in 2014 to $127.5 billion by 2018, a 23% compound annual growth rate. This would be about six times the growth rate of the overall IT sector, according to the report.

Competition has certainly picked up for Amazon’s cloud computing arm. AWS faces competition from Microsoft’s (MSFT) Azure cloud platform, Alibaba’s (BABA) cloud computing arm called Aliyun, and Oracle (ORCL), a new competitor on the block that recently announced its interest to compete with AWS on price.

For diversified exposure to Amazon, you can invest in the PowerShares QQQ Series 1 ETF (QQQ), which invests about 3.5% of its holdings in Amazon.


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