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Amazon Strengthens Customer Base With Symantec & SAP Deals


Amazon AMZN is leaving no stone unturned to bolster its presence further in the rapidly growing cloud market on the back of its winning cloud contracts.

Reportedly, the company’s cloud platform Amazon Web Services has recently extended its partnership with its clients namely Symantec SYMC and SAP SAP.

Per Bloomberg, each contract is worth $500 million will be spread over the next five years, yielding $200 million revenues individually every year.

Though the terms of the deal have been kept under wraps, both SAP and Symantec are likely to leverage their cloud strategies by utilizing the power of AWS to sustain momentum in the global cloud market.

Notably, the latest move will add strength to the customer base of AWS which will aid its market share.

Coming to the price performance, shares of Amazon have returned 58.4% over a year, outperforming the industry’s rally of 9.7%.

AWS Gaining Traction

AWS’ strong focus toward improvement of its service portfolio will continue to expand its customer base. Moreover, it will aid the company in reaping benefits from the cloud market which holds immense potential.

Per a latest Gartner report, the global market for public cloud services is expected to grow 21% in 2018 from $145.3 billion in 2017. Further, it is expected to witness an improvement of 17.3% in 2019 from $175.8 billion in 2018.

We note that the company is well poised to reap benefits from this rapidly growing market with the aid of its robust artificial intelligence (AI) and machine learning (ML) techniques.

According to data from Gartner report, AWS is projected to generate sales of $83.5 billion by 2021.

Recently, AWS has won quite a number of clients such as Samsung Heavy Industries, Major League Baseball (MLB), 21st Century Fox, Formula One and Epic Games.

We believe growing adoption rate of AWS will continue to drive Amazon’s top-line growth and improve its market position.

Amazon.com, Inc. Revenue (TTM)

Amazon.com, Inc. Revenue (TTM) | Amazon.com, Inc. Quote

Improving Competition

Amazon’s continuous efforts to improve its offerings will continue to help it in gaining momentum in the market.

Recently, AWS has extended its partnership with Salesforce.com to offer improvised data integration services to its customers This move is in sync with Amazon’s intention to ensure seamless and secured sharing of data by integrating its products with those of Salesforce.

Further, the company has made Amazon EC2 High Memory Instances available to general public. This will aid in running large in-memory databases. Further, it announced the general availability of T3 instances for Amazon EC2.

We believe an expanding cloud services portfolio will continue to provide a competitive edge against Microsoft’s MSFT Azure and Alphabet’s Google Cloud.

Moreover, Amazon’s latest long-term deals with Symantec and SAP will intensify the competition for Azure and Google Cloud as these also have a tie up with both of the companies. Further, Azure was also looking for the Symantec deal.

All these factors will aid Amazon to sustain its dominant position in the cloud market.

Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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