Mizuho Securities analysts reiterated Amazon (NASDAQ:AMZN) stock as their top pick, citing “signs of accelerating sales cycle” within the company’s AWS division amid growth of executive business center (EBC) meetings “and early exits of on-prem data center contracts.”
Historically, deals tend to be finalized 60 days post-meeting, a significant improvement over the usual 90-day sales cycle.
Moreover, surveys reveal that AWS customers are terminating their on-premise data center contracts more rapidly than before through prepayments, indicating faster migration to AWS and an increase in sales cycle velocity, analysts said.
Mizuho also noted that the company’s budget for the fiscal year 2024 points to a significant shift towards infrastructure spending, suggesting an accelerated migration of workloads to AWS.
Two key drivers behind this trend include AWS customers focusing more on moving key mass of data into the cloud for generative AI deployment for the long-term and existing data in the cloud being “upgraded to vectorized or unstructured data warehousing to optimize for Gen-AI.”
Lastly, Mizuho noted that consumption levels are expected to return to historical norms, implying a potential 20% year-over-year growth in AWS spending.