JMP Has An Increasingly Positive View On Amazon Web Services

The brokerage noted that more than 7,500 AWS partners and clients attended the event, "making it the biggest Public Sector Summit to date." The analysts came out with three takeaways from the summit.

The first is that AWS' "investment and innovation continued with ~1,000 new products expected to launch this year," compared to 772 unveiled in 2015 and 514 in the preceding year. The second is "analytics and IoT are key areas of focus going forward." The third is that "AWS is focused on customer service, whereby ~90 percent of all new features stem from client requests."

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"And while the competitive environment continues to grow, we believe AWS is constantly differentiating itself through product innovation as we feel AWS users value new products, service, and support more than price," wrote the analysts in a research note.

JMP expects AWS to generate $12.1 billion revenue for the current year, representing 54 percent year-over-year growth and CSOI of $3.3 billion with 27.6 percent margin.

The brokerage concluded, "We continue to believe the risk/reward on Amazon shares remains favorable given improved profitability across its retail business, overall revenue growth, and strong execution at AWS, despite shares being up 8.3 percent since 1Q16 earnings (vs. 1.5 percent for the S&P)."

At time of writing, Amazon was down 0.33 percent at $713.45 on the day.