Amazon.com Inc.’s cloud-storage business is on a clear path toward a $3 trillion value, almost triple what the whole company is worth now in the stock market, according to a Redburn Ltd. analyst.
The unit, Amazon Web Services, is so powerful that the company may decide at some point to split it off from the massive, slower-growing online retail operation, analyst Alex Haissl wrote in a 128-page report initiating coverage of the cloud-computing industry. He didn’t say when the $3 trillion value may be achieved.
“Separating AWS may not be on the table for now, but if the performance gap versus the non-AWS parts continues to widen, it could be on the table further down the road,” wrote Haissl, a former head of automotive research at Berenberg and Credit Suisse Group AG who began his career as a police officer in Vienna.
Haissl recommends buying Amazon shares and sees the stock reaching $270 in the next year, the highest target on Wall Street and 150% above Tuesday’s closing price. He also rated Microsoft Corp. a buy, Snowflake Inc. as neutral and has a sell on MongoDB Inc.
Amazon Web Services’ revenue jumped 37% to $18.4 billion in the first quarter even as the company’s core e-commerce business saw a decline in sales. “There is no sugar-coating the weak performance” of online retail, he said, adding that “we do not think the business is structurally broken.”
