Amazon Web Services Is 'Destroying' Its Competition

Amazon reported its second-quarter results after Thursday's market close and said that its AWS segment saw a year-over-year growth rate of 58 percent on an annual revenue run rate of more than $12 billion. The segment also reported an operating margin of 35 percent.

Related Link: Amazon Reports Strong Bottom Line Beat, Operating Income Surges YoY

"Never in the history has any company been able to accomplish this kind of growth and operating margin, on a revenue base of >$12 billion," the analyst wrote.

Chowdhry added that Amazon's quarterly results reaffirm his belief there will only be two SuperCloud vendors in the market: Amazon's AWS and Microsoft Corporation MSFT.

Meanwhile, on-premise hardware vendors, such as NetApp Inc. NTAP and software vendors including VMware, Inc. VMW are "on borrowed time."

The analyst stated that the market is moving away from these old-school vendors and "will never come back." In fact, the on-premises vendors will see their total available market shrink by 40 percent, and fundamental investors are cautioned to avoid these companies.

Finally, Chowdhry said he will publishing a multi-part Amazon AWS report over the next two to three months, which will take a deeper dive into the competitive landscape and Amazon's AWS impact on the many on-premise vendors.

At time of writing, Amazon was up 2.14 percent in Friday's pre-market, seen trading at $768.70.

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