Amazon Web Services Valued At $160 Billion

Deutsche Bank believes that Amazon's cloud computing business could soon be valued at $160 billion

Amazon Inc. is the world’s largest retailer in the world. The company faced tough competition domestically as Wal-Mart was raising the bar higher and higher. However Amazon is trying to do the best it can in some areas where Wal-Mart is backing out. For instance, Wal-Mart has said no to free deliveries but expects customers to place orders online and pick them up for their stores whereas Amazon will be offering free deliveries on all items and products to its customers. Hence, the online retailer is winning the race here in the e-commerce market.

Apart from this, the company wanted to do make its name outside the e-commerce market as well. It expanded its business into different categories such as cloud computing business, smartphone business, and now the recently launched tablet business. The cloud computing business of the company is named as Amazon Web Services which is known as a huge business. The quality and services it provides to its customers is top notch even analysts says that no cloud company could match Amazon’s services as a cloud infrastructure.

Previously, the CEO of the company Jeff Bezos stated that it sees AWS as a $5 billion business which is booming currently in the virtualization industry. Reports now suggest that the business could go as high as to be valued at a massive $160 billion business. No one expected Amazon’s cloud business to come up as high as it is at the moment. People had more expectations of its e-commerce side. Small and Medium Sized Businesses (SMBs) as well as large enterprises are now looking to rent out the cloud infrastructure of Amazon.

Most businesses are now seeing it as a warehouse of cloud computing. CNN reported, “Amazon Web Services, the company's network of servers, data storage technology and virtual computing platforms, is on pace to bring in more than $7 billion in sales this year.” Deutsche Bank further predicted that the sales could touch the $16.2 billion mark by 2017. Hence, this would help the company’s cloud business in achieving the $160 billion value.

Deutsche Bank said in a note regarding a magnificent increase in the value. It stated, “We conclude that a 2017 revenue multiple of 10x seems fair for AWS, which given our 2017 AWS revenue estimate of $16 billion implies a valuation of $160 billion” The company is currently giving tough times to the likes of Google, Microsoft, and Oracle etc. in the market. 

Amazon stock was up 14.70% to $655.65 at market close on Thursday Oct 5th.