Amazon Web Services To Experience A Downturn?

#AWS: -Constant currency revenue growth declined to 43% vs. 64% in Q1 2016. -Operating margin declined for the second quarter in a row to 24.3%, vs. 26.6% and 26.2% in the past two quarters. Out of all the numbers, the most worrisome is the decline in AWS operating margin. The concern is not only the two straight quarters of decline in margins, but also the magnitude of the decline (-2% vs. two quarters ago). What this reflects is that AWS is facing significant headwinds in terms of competition. This is reinforced by the earnings calls of #Microsoft (NASDAQ:MSFT) and #Google (NASDAQ:GOOG) (NASDAQ:GOOGL), #AWS' two biggest competitors, which stated that both of the company's cloud segments grew significantly. Especially frightening to Amazon investors is the comment from Microsoft management in their earnings call which said that enterprises (the big companies with the big money) prefer to use Microsoft's cloud as they have significantly more experience and footprint in terms enterprise computing. The implication for all this is that when valuing AWS, the biggest portion of Amazon's equity value and their biggest growth driver, revenue growth and operating margins must be guided down, which will result in a drastic decrease in AWS value. (Many analysts were valuing AWS based on a 40% operating margin in the future, but it is already starting to decline since it reached 26%. Not good.) Recently, there has been confirmation of a first ever down-tick in AWS's growth momentum. Deutsche Bank's reported that in their conversations with Amazon's network of partners and specialist, there were indications that the migration of existing businesses to the cloud is proceeding at a slower pace than expected, and that there is a "first-ever downtick from partners around the pace of large European enterprise cloud migrations." Deutsche Bank also checked with its contacts in the US and heard that the same slowdown is happening domestically.

https://seekingalpha.com/article/4089875-amazon-web-services-experience-downturn