Amazon Eyes Cloud Expansion: Will the NZ AWS Region Drive Growth?

Amazon AMZN is intensifying its cloud ambitions as AWS (Amazon Web Services) posted 18% year-over-year growth to $30.8 billion in the second quarter of 2025, contributing about $10.2 billion in operating income. This underscores AWS’ pivotal role in the company’s profitability.

The launch of the AWS Asia Pacific (New Zealand) Region, backed by a NZ$7.5 billion investment and three Availability Zones, adds a sovereign, renewable-powered hub to APAC. This move addresses critical needs — including low latency, data residency compliance and generative AI capabilities — that appeal to sectors like finance, healthcare and government. Services such as Amazon Bedrock and Amazon Q further strengthen AWS’ AI-driven value proposition.

Beyond infrastructure, AWS has signed an MoU to train 100,000 New Zealanders, aligning with national priorities and accelerating local adoption. By placing infrastructure onshore, AWS removes friction for regulated industries and positions itself as a premium platform for AI, ML and analytics workloads — areas driving higher-margin growth.

Per the AWS Marketplace report, the global Cloud Computing Market is expected to reach $1.9 trillion by 2030 at an 18.7% compound annual growth rate, fueled by AI and ML adoption. To capture this, AWS plans 10 new Availability Zones and three additional Regions in Chile, Saudi Arabia and Europe. With 120 AZs across 38 regions, AWS is aggressively reinforcing its global footprint against Microsoft Azure and Google Cloud.

While the New Zealand region may deliver a near-term revenue boost, its strategic impact is significant, unlocking local demand, enabling sustainable cloud adoption and deepening AWS’ APAC dominance. Over time, these investments compound into a durable growth driver for Amazon’s cloud business.

According to the Zacks model, AWS sales are projected to increase 18% year over year, reaching $126.9 million in 2025.

Amazon’s Cloud Business Faces Rising Competition

Microsoft’s MSFT Azure has emerged as a formidable rival to AWS, leveraging deep enterprise integration, hybrid-cloud leadership and its OpenAI-powered Copilot. In fiscal 2025, Microsoft Azure surpassed $75 billion in revenues, growing over 34% year over year while expanding to 400+ data centers across 70 regions. Microsoft’s AI-first strategy — backed by liquid cooling innovation and massive capacity expansion — cements its edge in scalability, performance and enterprise adoption. With diversified revenue streams, Microsoft continues to demonstrate unmatched strength in cloud and AI transformation.

Alphabet Inc. GOOGL-owned Google Cloud Platform is rapidly gaining ground with strengths in AI, machine learning and proprietary hardware like TPU chips, while partnerships with NVIDIA and PayPal enhance its ecosystem. In the second quarter of 2025, Google Cloud revenues rose 31.7% year over year to $13.62 billion, pushing its annual run rate above $50 billion. Alphabet leads in offering NVIDIA’s latest GPUs and expanding tools like Agent Designer for AI agents. With 42 regions and 202 edge sites, Alphabet is strengthening Google Cloud’s global scale and enterprise appeal.

AMZN’s Share Price Performance, Valuation & Estimates

AMZN shares have gained 4.3% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 13.2% and 8.6%, respectively.

AMZN’s YTD Price Performance

From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month Price/Sales ratio of 3.23X, higher than the industry’s 2.3X. AMZN has a Value Score of D.

AMZN’s Valuation

The Zacks Consensus Estimate for AMZN’s 2025 earnings is pegged at $6.73 per share, reflecting an upward revision of 6% in the past 30 days and 7.2% over the last 60 days. This indicates a 21.7% increase from the figure reported in the year-ago quarter.

Amazon stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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