Amazon Could Win The Cloud Wars With Automation, Says KeyBanc Analyst

Amazon.com, Inc. AMZN's Amazon Web Services is the largest cloud platform in the world, but as the next stage of cloud competition unfolds, will Amazon hold its leadership status? KeyBanc Capital Markets tackled the question in a note out this week. 

The Analyst

KeyBanc's Brent Bracelin maintains a Sector Weight rating on Amazon's stock with no assigned price target.

The Thesis

Amazon's AWS boasts a revenue run rate of $20 billion, which is more than twice that of its two biggest competitors combined, Bracelin said in a Wednesday note. Now that Amazon has won the first stage of the cloud wars after introducing 1,000 enhancements annually for more than two years, the competition will shift from a "feature race to an automation race," the analyst said. (See Bracelin's track record here.) 

At the regional AWS Summit SF on Wednesday, Amazon said the sector is all about "automation, automation and more automation," the analyst said. Fargate is automating Lambda, Lex and DynamoDB calls while AWS Secrets Manager is automating application password and protection management, according to KeyBanc. 

• Automating Amazon's AWS business creates three major benefits for the company, Bracelin said:
• Material cost savings compared to on-premise alternatives.
• It can save time for developers.
• It serves as a major competitive differentiator against rivals. 

Since Amazon's focus on automation is aligned with the direction of the cloud market, the company should be able to double its revenue to $41 billion in 2020, Bracelin said. 

Price Action

Shares of Amazon were trading higher by 2.66 percent at the time of publication Thursday.

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