2025-08-05 15:42Investment Rating - The report maintains a positive outlook on the cloud services industry, particularly for AWS, with projected growth rates of 18%-20% in the coming years [1][4]. Core Insights - AWS shows strong order backlog and demand in both AI and non-AI sectors, similar to competitors Azure and GCP [1][3]. - NVIDIA's Blackwell chip procurement by the top four cloud providers is expected to reach $65-70 billion in 2025, with AWS capturing a smaller share compared to Microsoft and Google due to its in-house chip strategy [1][5]. - AWS's profit margin has decreased by 600 basis points due to stock incentive adjustments, but revenue growth is expected to rebound to around 30% in the upcoming quarters [8]. Summary by Sections AWS Growth and Performance - AWS is projected to achieve growth rates of 18%-19% in the second half of 2025 and 20% in the first half of 2026, with AI companies contributing significantly to revenue growth [1][4]. - Annual recurring revenue from AI companies is expected to increase from $1 billion to $4-5 billion, contributing approximately 2% to overall growth [4]. Capital Expenditure and Strategy - Capital expenditures are primarily directed towards AWS for power and data center construction, with an annualized increase of approximately $30 billion [2][9]. - There are indications that AWS may introduce AMD instance services, which could diversify its offerings but still rely heavily on NVIDIA's dominance in the cloud market [7]. Competitive Landscape - Meta's advancements in GPU machine learning are expected to enhance user engagement and profitability, with EPS projections for 2026 reaching $33, potentially rising to $35 with strong performance [12]. - Google's cloud business is performing well, with partnerships with AI-native companies and advancements in technologies like Gemini, positioning it for significant growth in 2026 [14][15].