Amazon: The Cloud Party Is Over, Welcome To The Buyer's Market? (Rating Downgrade)
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Mikhail Fedorov869 FollowersFollow5ShareSavePlay(14min)CommentsSummaryAmazon is downgraded to Hold due to rising risks in the cloud computing market despite strong recent financials.Cloud segment growth has been fueled by past excess demand, but new capacity and slowing end-user demand threaten future pricing and margins.Rapid data center buildout could soon outpace organic demand, shifting the market from seller's to buyer's, intensifying competition and price pressure.AMZN's P/E of 32 is reasonable, but macroeconomic weakness and potential oversupply in cloud warrant caution despite no current negative earnings signals. krblokhin/iStock Editorial via Getty Images Over the summer, I wrote an article about Amazon (AMZN) (AMZN:CA) and recommended buying shares of this company. But in this article I change my recommendation to hold. And the reason isThis article was written byMikhail Fedorov869 FollowersFollowI started trading on the Moscow Exchange in 2005 as a private trader. Since 2010, I have been a financial markets analyst. I worked as an analyst in several brokerage companies in Russia and then in Ukraine since 2018. I also worked for a leading financial media outlet in Ukraine, covering global markets for Ukrainian readers. I specialize in macroeconomics and general market trends. I am also interested in history and philosophy. Although I received my economic education at Yakutsk State University, I am still largely self-taught. I see Seeking Alpha as a step up in my development, and an exit from the regional market to the global market with an opportunity to share my thoughts and ideas with the whole world.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.