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Amazon's Web Services Conference Takeaways From Deutsche Bank

Amazon's Web Services Conference Takeaways From Deutsche Bank

Deutsche Bank said that the notable feature of, Inc. (NASDAQ: AMZN)'s Web Services conference was the added emphasis on "next-gen" data analytics, Docker container, server automation (via Lambda) and IoT services.

"AWS focused more on its data analytics services and the new QuickSight product than we expected," analyst Karl Keirstead wrote in a note.

However, Keirstead is reluctant to draw too negative a read-through to Tableau Software Inc (NYSE: DATA).

"Our checks that are close to the AWS QuickSight product team tell us that QuickSight is lightweight and v1, lacking many of the features that Tableau and Qlik Technologies Inc (NASDAQ: QLIK) have and that it complements rather than replaces these incumbent tools," the analyst highlighted.

Related Link: Amazon's Cloud Services Could Add $1 Billion To Revenue, Says Pacific Crest

That said, the analyst's checks suggest that AWS will announce new QuickSight features at the re:Invent 2016 event.

Further, the analyst spoke to the CTO of Intuit Inc. (NASDAQ: INTU), one of the more high-profile AWS customers.

Intuit said, "AWS is increasing its lead over Microsoft Corporation (NASDAQ: MSFT)'s Azure and Google (Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL))'s Cloud Platform (contrary to investment community thinking), that the fear of AWS lock-in is exaggerated and that in the future, the entire SMB sector will live on AWS or other clouds and only the very largest enterprises will likely still invest in private data centers."

"Intuit will run existing technology (Oracle Corporation (NYSE: ORCL), Red Hat, Inc (NYSE: RHT)) in AWS and has no plans to move off, inc. (NYSE: CRM), ServiceNow Inc (NYSE: NOW) or Splunk Inc (NASDAQ: SPLK), but was clearly open to change down the road."

Keirstead expects AWS's second-quarter revenue to rise 53 percent to $2.8 billion, in line with consensus, and said it may prove conservative, as his checks point to solid adoption across many key verticals.

AWS CSOI margin declined by 70bps quarter-over-quarter in the first quarter due to lower FX benefit, and the analyst expects a similar trend in the second quarter, but reversing back up in the second half.

"We expect a conservative guide for AMZN in 3Q16, reflecting incremental investments related to logistics, international and content. After strong relative outperformance, we think AMZN shares may be range-bound on 2Q results, although we remain BUY-rated longer-term," Keirstead added.

Shares of Amazon closed Wednesday's regular trading session at $742.63. At time of writing, Amazon was seen up 0.46 percent on Thursday, trading at $746.01. Keirstead has a price target of $900.

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