For Amazon (AMZN), stay-at-home orders have been good for business. Demand for product has surged, with the internet colossus expanding operations during lockdown and responding to consumers’ needs, many of which switched to online retail for the first time during the global crisis.
Yet, COVID-19 has also resulted in an acceleration of other trends which were already in motion. In a post-COVID world, these trends will become commonplace much faster than previously anticipated. Take cloud-based services, for example. The success of remote working during lockdown suggests the movement will only gain steam even as restrictions are eased, highlighting the need for robust cloud infrastructures. Who stands to benefit? Amazon, naturally.
Following a keynote address by Amazon CTO Werner Vogel during an online AWS summit, 5-star Monness analyst Brian White comemnted, “With a positive, secular cloud trend and now the COVID-19 crisis, Werner believes that ‘most organizations will be transforming into a completely cloud-based environment’ in 2020 and beyond… Moreover, video streaming has clearly taken on a life of its own during this crisis with AWS supporting the leading streaming and video conferencing platforms.”
Looking specifically at video streaming, it has been a hallmark of the crisis. Data from Conviva indicates that during March 17-23, daytime global streaming viewing grew by 39%, compared to March 3-9. Additionally, according to estimates from Nielsen, during the week of March 30, there were 161.4 billion minutes of U.S. video streaming as opposed to 69.8 billion minutes during the same week in 2019.
But will the trend continue once normality - or something resembling the previous normal - resumes?
Most likely. With AWS having, what White calls “the widest array of databases in the cloud” and solutions which simplify the integration of machine learning into SaaS services, many wouldn’t bet against Amazon.
Neither would White. The 5-star analyst has a Buy rating on AMZN shares that accompanies a $2,800 price target. The implication for investors? Upside potential of 14%. (To watch White’s track record, click here)
The rest of the Street likes what it’s seeing, too. Amazon’s Strong Buy consensus rating is based on 38 Buys, 2 Holds and 1 Sell. With an average price target of $2,673.17, the analysts expect further gains of 9% in the year ahead. (See Amazon stock analysis on TipRanks)