Market Overview

Amazon-Salesforce Deal Could Top $50 Billion In Investments (If Cloud Continues Its Rise)

Amazon-Salesforce Deal Could Top $50 Billion In Investments If Cloud Continues Its Rise
Related CRM
Technical Alert: Reaches October Low And Rebounds
Jim Cramer Shares His Thoughts On Salesforce, Advanced Micro Devices And Worthington Industries
Time To Sell Tech (Seeking Alpha)
Related AMZN
Industry Expert Discusses The Future Of 3D Printing: Consumer Products And Energy Efficiency
Award-Winning Young Entrepreneur Talks About The Etsy Of Latin America
Catch 22? (Seeking Alpha)

Pacific Crest reiterated an Overweight rating and $800 price target on shares of, Inc. (NASDAQ: AMZN). According to analysts Brent Bracelin, Alyssa Johnson and Edward Yruma, the firm’s bull thesis on Amazon is reinforced by the fact that, inc. (NYSE: CRM) plans to use Amazon Web Services to expand its core SaaS offering (Sales Cloud, Service Cloud, Analytics Cloud and App Cloud) internationally.

In fact, seeing the largest SaaS vendor, which counts with the necessary scale to deploy private clouds, still making a multi-million dollar commitment to rent Amazon Web Services’ infrastructure confirms their idea that AWS offers a differentiated cloud platform.

It should be noted that over the next four years, the Salesforce-AWS contract could result in the consumption of roughly $400 million in cloud services – starting at $70 million in the first year and reaching $126 million in the fourth year. Pacific Crest has estimated that, for every $100 million of AWS consumed, $0.04 are added to EPS and $0.11 to EBITDA per share.

Taking this into account, the analysts recommended growth investors to continue to hold Amazon’s stock, pointing out that AWS not only has a four-year first-mover advantage over Microsoft (NASDAQ: MSFT) Azure and six-year advantage over Google (NASDAQ: GOOGL) (NASDAQ: GOOG) Cloud Platform, but they also expect its IaaS share could surge to 53 percent by the end of the year.

“This would be larger than all of its competitors combined. AWS remains a key upside lever to revenue and profits this year and next, in our view,” they concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for CRM

Nov 2016OTR GlobalUpgradesMixedPositive
Oct 2016RosenblattInitiates Coverage OnBuy
Oct 2016DA DavidsonMaintainsNeutral

View More Analyst Ratings for CRM
View the Latest Analyst Ratings

Posted-In: Alyssa JohnsonAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Tech Trading Ideas Best of Benzinga


Related Articles (AMZN + CRM)

View Comments and Join the Discussion!