Can AMZN's AWS Partnerships Counter Cloud Market Share Declines?

Amazon AMZN-owned Amazon Web Services (“AWS”) deepened its African footprint with a strategic partnership announcement from South Africa's Absa Group, signaling AWS' aggressive push to capture emerging market cloud share amid intensifying competition from Microsoft MSFT Azure and Alphabet GOOGL-owned Google Cloud. The multi-year framework positions AWS as Absa's preferred cloud provider, marking another win in Amazon's quest to maintain its cloud dominance despite rivals posting faster growth rates.

This follows AWS' broader partnership momentum in 2025, including expanded collaborations with Intel for custom chip designs and Vodafone for edge computing deployments across Europe. These strategic alliances demonstrate AWS' dual approach of penetrating untapped geographic markets while strengthening technological capabilities through hardware partnerships.

AWS' second-quarter 2025 performance revealed the challenges facing the cloud leader. AWS revenues grew 17.5% year over year to $30.9 billion, maintaining market leadership but trailing Azure's 39% and Google Cloud's 32% growth rates.

Recent data from Synergy shows that AWS remains the dominant cloud leader in the world, capturing 30% share of the global market in the second quarter of 2025 despite a 2-point decline year over year. Microsoft achieved a 20% share of the global cloud market as the software giant’s share dropped 3 points year over year. Google Cloud continued to grow at 13%.

To fend off competition, AWS has planned 10 new Availability Zones (AZs) and three additional Regions in Chile, Saudi Arabia and Europe as the global Cloud Computing Market is expected to reach $1.9 trillion by 2030 at an 18.7% compound annual growth rate. With 120 AZs across 38 regions, AWS is aggressively reinforcing its global footprint against Microsoft Azure and Google Cloud.

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

AMZN’s Share Price Performance, Valuation & Estimates

AMZN shares have gained 7.5% in the year-to-date period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 14.2% and 10.8%, respectively.

AMZN’s YTD Price Performance

From a valuation standpoint, AMZN stock appears overvalued, trading at a forward 12-month Price/Sales ratio of 3.32X, higher than the industry’s 2.26X. AMZN has a Value Score of D.

AMZN’s Valuation

The Zacks Consensus Estimate for Amazon’s 2025 earnings is pegged at $6.73 per share, indicating a 10.85% increase from the figure reported in the year-ago quarter.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

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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