Amazon Web Services will take a further hit in 2023: Dan Niles
Amazon.com Inc (NASDAQ: AMZN) will continue to see weakness in its “cloud” business next year, says Dan Niles – the Founder of Satori Fund.
Demand will slow down further in 2023
According to Niles, demand for cloud computing is contracting and will continue on that path now we’re out of the pandemic and consumption is slowing down.
As companies budget for next year, they’ll go, we’ll have less employees, we need less enterprise software, we need less cloud computing resources. These are consumption-based models and consumption is slowing down for internet-based services.
In the latest reported quarter, the tech behemoth reported revenue from Amazon Web Services up 27% – its slowest growth since 2014 (read more).
Niles is super dovish on the market at large for next year and expects the S&P 500 to retest or even make new lows in 2023.
How would that affect the Amazon stock?
What he’s suggesting does not paint a rosy picture for the Amazon stock considering the multinational drives much of its operating profit from the cloud segment. On CNBC’s “TechCheck”, Niles said:
It’s really Amazon Web Services that drives the multiple for this company. They said, exiting last quarter, revenues were growing at 25% in AWS. I think you’ll see that number getting into the teens next year.
On a separate CNBC interview on Monday, Jefferies’ Brent Thill also said that he had reason to believe that shares of this Nasdaq-listed firm had not bottomed just yet.
That’s when the Amazon stock is already down more than 45% versus the start of 2022.
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