Amazon Up 23.4% YTD on AWS Cloud Strength

Shares of e-commerce and cloud computing giant Inc. (AMZN) are already up 23.4% year-to-date (YTD), bringing the stock's most recent 12-month gain to a whopping 72.8% as the Street cheers its growing dominance across its high-margin segments. Of Amazon's most promising businesses, its industry-leading public cloud platform, Amazon Web Services (AWS), is a driving force behind analysts' overwhelmingly bullish outlook. (See also: Amazon Inching Ahead in Competition With Alphabet.)

Amazon's cloud business, which saw sales skyrocket 43% in 2017 to $17.5 billion, is now the fifth-largest business software provider in the world. AWS now constitutes approximately 10% of the Seattle-based retail giant's total revenues, the company reported last week. In terms of revenues, Amazon's cloud business lists just behind publicly traded enterprise software providers Microsoft Corp. (MSFT), International Business Machines Corp. (IBM), Oracle Corp. (ORCL) and SAP (SAP), which all head off against the retailer in the cloud space and lag well behind AWS. Amazon's cloud segment already topples SaaS market pioneer Inc. (CRM), which generated sales up 25% to $9.9 billion over the most recent 12-month-period. 

Tech Giants Struggle to Compete with AWS

SAP, with 2017 sales at $26.5 billion, could lose its place as the fourth-largest business software company to AWS before the end of 2019, if the companies' current growth rates continue. The German tech company grew revenues 6% last year, forecasting for the same growth rate in 2018. The Street expects AWS to spike 38% this year, according to FactSet.

Competing against AWS, comprised of a suite of services including databases, data analytics, productivity apps and raw computing, has proved challenging for the world's largest tech companies. Some, including Cisco Systems Inc. (CSCO) have decided to throw in the towel altogether, while others such as VMware Inc. (VMW) have found teaming up with Amazon a better option. 

Last week, AMZN stock reached record highs on Q4 results that blew past consensus estimates. A handful of analysts lifted their price targets on the FANG stock, including Morgan Stanley, Barclays, Credit Suisse, Mizuho, JPMorgan and Bank of America Merrill Lynch. (See also: How Jeff Bezos Got to Be the World's Richest Man.)

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