AWS growth is expected to soar to 35.5%, and AI revenue is skyrocketing by nearly 500%! TD Cowen is optimistic about Amazon's impressive Q2 performance
TD Cowen released a research report optimistic about Amazon's Q2 performance, expecting AWS revenue to grow by 35.5% year-on-year, with revenue related to generative AI skyrocketing nearly 500% to $6.9 billion. Analysts believe that AI demand is driving accelerated growth in cloud business, forecasting Amazon's total revenue for Q2 to reach $200.1 billion, a year-on-year increase of 19.3%. Although maintaining a "Buy" rating, the target price has been lowered by 3% to reflect recent pullbacks
According to the Zhitong Finance APP, TD Cowen published a research report stating that Amazon's (AMZN.US) cloud business is accelerating growth and is expected to deliver impressive results for the second quarter. The firm estimates that AWS's second-quarter revenue growth rate will reach 35.5% year-on-year, higher than last year's 28.4%, and 3.4 percentage points above the market consensus.
Analyst John Blackledge attributes this impressive growth to the rapid rise of generative AI workloads. He noted that as Amazon's large-scale investments in AI infrastructure gradually alleviate supply bottlenecks, the company is better positioned to meet the growing demand for generative AI.
In a report to clients, Blackledge stated, "We estimate that Amazon's generative AI-related revenue is approximately $6.9 billion, with a quarter-on-quarter growth of 88% and a year-on-year increase of nearly 500%. Among this, revenue related to Anthropic—including Claude API calls, model training services, and chatbots—is expected to reach $4.6 billion, accounting for about two-thirds of AWS's total generative AI revenue."
For the overall performance in the second quarter, Blackledge expects Amazon's total revenue to reach $200.1 billion, a year-on-year increase of 19.3%, which is 1% higher than the upper limit of the company's guidance. Revenue from the North American market is expected to grow by 15.1% (compared to 12.1% in the previous quarter), driven mainly by positive fundamental factors such as improved delivery speed and strong demand for daily necessities.
Looking ahead to the third quarter, AWS is also expected to provide strong support for performance expectations. TD Cowen's forecasts for Amazon's third-quarter revenue and operating profit are 0.3% and 3.2% higher than the market consensus, respectively, mainly due to the continued acceleration of AWS revenue driven by AI demand.
Blackledge maintains a "Buy" rating on Amazon but has lowered the target price by 3% to reflect the slight pullback in the stock since May
