Mizuho analysts see Amazon (NASDAQ:AMZN) on the cusp of an AI inflection point, citing a recent customer survey with a leading channel partner.
The investment firm's survey revealed several key trends that point to accelerated growth for Amazon's cloud computing arm, Amazon Web Services (AWS).
"We see an accelerated sales cycle from increased demand of ECB meetings and incremental exits of data center contracts," the note states. Enterprises are said to be seeking to finalize proposals and prepaying contracts to exit data centers, leading to a faster sales cycle for AWS.
While the spending mix by category remains largely unchanged, with infrastructure spending still dominant, Mizuho highlights a crucial shift: "cost optimization being offset by new services such as app monitoring, chatbot deployments, and large migration programs." This indicates a move towards higher-value services on AWS.
The most exciting finding, according to Mizuho, is the progress on Generative AI (Gen-AI) projects.
"The survey shows external-facing models (20% of total) are only 6 months away from commercial deployment," the report notes. This suggests a potential surge in inferencing activity as these models are rolled out to a large external customer base.
Based on these findings, Mizuho has increased its conviction on AWS revenue growth, forecasting 20% YoY growth compared to the consensus of 17.5%. They maintain AMZN as a Top Pick with a price target of $240.