Wall Street believes Amazon has a $160 billion business sitting under its roof
PHILIPPE LOPEZ/AFP/Getty Images
According to a note by Deutsche Bank on 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, who 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 much 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 maker 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 9 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.
Deutsche Bank
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market