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Amazon Web Services Adds Upside Despite Stretched Valuations

Amazon Web Services adds upside to the core growth story.

The Re:Invent 2015 Conference substantiated AWS' value proposition by going into greater detail on the usefulness of the service and how they're reducing friction in adoption.

They also explain at Re:Invent 2015 how they're able to win customers earlier on while also creating relevant security features for data-sensitive industries.

The improvement in developer capability, lower cost of ownership and rapid deployment of code for applications creates a compelling value proposition.

As such, analysts in the sell-side community anticipate upside to growth and margins, whereas institutional types are banking on Amazon to become that "next" Apple story.

So for the most part, I'm pretty excited about Amazon (NASDAQ:AMZN) due to its strategic positioning in the enterprise space. The stock has outperformed the S&P 500 index all year, and quite frankly, a lot of that was attributed to transparency in the AWS segment and continuing upside in adjacent products and services.

After

the Amazon Web services re:Invent Conference, the company sets the tone by demonstrating that it has a host of relevant platform-specific initiatives to migrate both hybrid and on-premise data centers into the cloud. The most promising business win that Amazon announced was Capital One as it's a financial services firm which has a lot of sensitive data running through its servers. What's interesting about this is that Amazon is able to migrate Capital One's mobile application to its data center despite the highly sensitive financial data, which requires higher protection standards. Initially, I thought that there would be a use case for on-premise due to the sensitivity of data depending on the industry, but going forward I anticipate that financial services firms will migrate to the cloud. With data security being addressed, there will be a higher conversion rate from certain IT providers to AWS.

However, it's not just better security standards driving growth in the cloud, but also the speed of deployment when it comes to mobile applications. Amazon cites that it takes a substantially longer amount of time to deploy applications in on-premise or hybrid settings. However, companies are now starting to recognize not only the total...


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