Amazon AWS: Mizuho says ’revenues likely to be back-end loaded

Investing.com -- Amazon Web Services (AWS) may see "back-end loaded" revenue growth in 2025, as near-term indicators soften, according to Mizuho (NYSE:MFG) analysts. 

Despite some signs of slower sales cycles and increased competition, Mizuho said in a note Tuesday that AWS’s full-year budget remains unchanged at 20% year-over-year growth.

Mizuho’s latest AWS customer survey found that "sales cycles slowed modestly," particularly in financial services, but the trend was not as severe as the 2022 downturn, when economic pressures "caused lead time for deal closings to slow by 50%." 

Instead, they state the current slowdown appears driven by sentiment rather than hard economic data.

AWS has also begun offering "an additional 10% to 20% price discount for AI inferencing" to long-term customers, Mizuho noted. 

However, competition is intensifying, particularly from Google (NASDAQ:GOOGL) Cloud Platform (GCP), which is aggressively pricing new contracts. 

"GCP appears to be positioned to win new contracts" as it offers "up to 30% discount for customers signing long-term deals."

Given these factors, Mizuho expects AWS revenue growth in Q1 2025 to be "in-line to modestly below consensus." 

The analysts believe "the shape of revenue acceleration would likely be back-end loaded", with tougher comparisons in the first half of the year. 

However, they maintain their Outperform rating on Amazon (NASDAQ:AMZN) and a price target of $285, viewing the slowdown as a "timing issue" rather than a fundamental weakness.

While "elevated competitive activity" in cloud services remains a headwind, Mizuho sees a $60 billion cloud migration pipeline in regional banking over the next five years as a potential growth driver. 

For now, AWS faces short-term challenges, but Mizuho remains optimistic about its long-term trajectory.