Amazon's Cloud Services: A Growth Driver for the Future

Amazon stock has grown significantly since its inception, with a 233,000% increase in value. Despite concerns that it's too late to buy Amazon, the company's shift towards cloud services and investment in artificial intelligence (AI) offer significant growth opportunities. With AWS dominating the cloud market and Amazon investing over $100 billion in AI development, there is still time to buy Amazon stock. The Motley Fool's expert analyst team recommends Amazon as a buy, citing its competitive edge in the cloud and AI markets.

Amazon stock has seen an impressive 233,000% increase in value since its inception, but concerns persist about the stock's potential for future growth. Despite these concerns, the company's strategic shift towards cloud services and significant investments in artificial intelligence (AI) present substantial growth opportunities. As of July 2, 2025, Amazon's stock remains a compelling investment, particularly in light of its dominant position in the cloud market and its substantial AI development budget.

Amazon's AWS (Amazon Web Services) division is the market leader in cloud computing, commanding a significant share of the cloud market. AWS's revenues surged by 17% year-over-year in the first quarter of 2025, with an annualized revenue run rate of $117 billion. The AWS backlog reached $189 billion, providing forward revenue visibility. Furthermore, Amazon has been aggressively expanding its AI infrastructure, investing heavily in AI development and custom silicon like Trainium 2, which offers improved price performance compared to GPU-based instances.

Amazon's AI business segment now operates at a multi-billion-dollar annual revenue run rate, with triple-digit percentage growth year-over-year. The company has also introduced new AI model offerings through Amazon Bedrock and services like Amazon Nova foundation models, which include Anthropic’s Claude 3.7 Sonnet, Meta’s Llama 4 family of models, DeepSeek’s R1, and Mistral AI’s Pixtral Large. These initiatives are likely to continue driving momentum among cloud customers in the near term.

While Amazon faces competition from Microsoft's Azure and Google Cloud, its diversified businesses and substantial financial resources give it an edge. As of March 31, 2025, Amazon had $66.2 billion in cash and cash equivalents, with operating cash flow of nearly $17 billion in the first quarter. Despite capacity constraints, Amazon is well-positioned to benefit from AI demand at a massive scale.

In contrast, CoreWeave (CRWV) is a fast-growing pure-play AI infrastructure provider that has seen significant growth in its AI infrastructure market. CoreWeave provides specialized GPU-accelerated infrastructure through its 33 data centers, supported by 420 megawatts of active power. The company recently announced a $6 billion investment to set up a new data center in Lancaster, PA, with an initial capacity of 100 megawatts and potential to scale up to 300 megawatts. CoreWeave's strategic partnerships with major players like OpenAI and NVIDIA, and a massive $259 billion revenue backlog, position it well for future growth.

However, CoreWeave faces several challenges. The stock has declined sharply post its announcement of a $9 billion takeover of Core Scientific, losing nearly 25% since July 7. CoreWeave's aggressive capital deployment strategy, which expects capex to be between $20 billion and $23 billion for 2025, exposes the company to execution risks if contract revenue does not materialize on time. Additionally, high capex and interest expenses could strain free cash flow generation.

Conclusion

While both Amazon and CoreWeave offer growth opportunities in the AI infrastructure space, Amazon's dominant position in the cloud market and substantial AI development investments make it a more attractive investment. Amazon's AWS division continues to drive revenue growth and provides forward visibility through its extensive backlog. In contrast, CoreWeave's aggressive capital deployment strategy and potential execution risks make it a riskier investment.

References

[1] https://www.nasdaq.com/articles/coreweave-vs-amazon-which-ai-infra-stock-has-more-upside-right-now
[2] https://finance.yahoo.com/news/coreweave-vs-amazon-ai-infra-151500534.html