Amazon Web Services (AWS), a leading cloud computing provider, finds itself in the crosshairs after a difficult week that highlighted its growing challenges in the age of artificial intelligence.
On Monday, the Amazon.com, Inc (NASDAQ:AMZN) cloud division suffered one of the worst outages in its history, a 15-hour disruption that took down hundreds of corporate clients and consumer apps.
Then on Thursday, rival Alphabet Inc‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google deepened its partnership with the crucial AI startup Anthropic, announcing a deal to supply up to 1 million of its specialized AI chips—a direct blow to Amazon, which has invested billions in Anthropic.
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According to Citizens JMP Securities analyst Andrew Boone, AI is the primary engine fueling Alphabet’s continued growth across its two main businesses. Boone argues that AI is enhancing the core Search business by driving more user queries through features like AI Overviews and improving advertising by better understanding user intent.
The analyst expressed optimism over Google Cloud. He noted Google’s custom TPU chips provide a key cost advantage. GOOGL stock is up 34%.
The events highlight a common tech industry perception that three years into the AI boom, AWS is lagging its rivals, Bloomberg reported on Friday. Its share has slipped from nearly 50% in 2018 to 38% in 2024, according to Gartner.
Amazon stock is up close to 1% year-to-date. Bank of America Securities analyst Justin Post sees significant upside for Amazon, driven by a powerful combination of renewed strength in its retail business and a pivotal rebound in AWS.
Post identifies key growth drivers, including new data center capacity coming online in 2026, an accelerating sales backlog, and the success of its AI partner Anthropic, which will better position Amazon to highlight the advantages of its custom Trainium AI chips.
Meanwhile, competitors like Microsoft Corporation (NASDAQ:MSFT), up 24%, are now growing their corporate sales backlogs faster than Amazon.
According to Bank of America Securities analyst Brad Sills, Microsoft’s growth is being powered by three key drivers that position it as a leader in AI. Sills identifies robust demand for security services within the Azure cloud platform as a primary source of its renewed momentum.
He highlighted that increased enterprise investment in AI is forcing Microsoft to significantly ramp up capital spending on data centers, a key positive catalyst signaling strong, long-term customer demand. According to Sills, the steady adoption of higher-tier commercial Office licenses and the AI-powered Copilot services, continues to drive the company’s Productivity segment.
Price Actions: Amazon shares are up 0.28% at $221.71 at the time of publication on Friday. MSFT is up 0.51% and GOOGL 1.12%.
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