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Wall Street believes Amazon has a $160 billion business under its roof

Eugene Kim
Werner Vogels
Werner Vogels

Amazon CTO Werner Vogels.

Amazon's cloud-computing business is growing fast, and by some estimates it could be worth over $160 billion if it was a standalone business.

According to a note by Deutsche Bank Tuesday, Amazon Web Services is forecast to book $16 billion in revenue by 2017, and based on a 10x multiple, it would get a valuation of roughly $160 billion.

"We conclude that a 2017 revenue multiple of 10x seems fair for AWS, which given our 2017 AWS revenue estimate of $16 billion implies a valuation of $160 billion," the note said.

The note derived the 10x multiple by comparing AWS to some of its peers in the enterprise space, like Salesforce, Workday, and Google, which had a median 2016 revenue multiple of 9x. It also factored in the fact that AWS is facing a massive market opportunity in the cloud-computing space, and that it's growing at a faster clip than others, even though it's already been almost 10 years since its launch.

"Measured by revenues, AWS is approximately 6x larger than its biggest rival Microsoft Azure and is arguably the greatest disruptive force in the entire enterprise technology market today," the note said.

That would make AWS worth almost as much as Oracle, which has a market cap of $170 billion, and nearly triple the size of Salesforce, one of the fastest-growing cloud-software makers with a $50 billion market cap.

That may sound ridiculous, but not when you think of AWS's impressive growth over the years. In its most recent quarter, AWS grew 78% year over year, reporting $2.1 billion in revenue, after growing another 81% in the quarter before that. Plus, it's profitable at $521 million last quarter, giving it a healthy 25% margin.

Based on that growth, Deutsche Bank says AWS could be the fastest-growing enterprise tech company ever. AWS launched in 2006 and is forecast to surpass the $10 billion revenue mark on its 10th anniversary next year. By comparison, it took nine years for Google to hit $10 billion and 10 years for Facebook. Oracle and Microsoft each took 23 and 22 years, respectively, to pass the $10 billion milestone.

Amazon Web Services chart
Amazon Web Services chart

(Deutsche Bank)

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