Amazon Soars Ahead of Cloud Computing Rivals
Hyperscalers, companies that own large data centers, have been aggressively building out artificial intelligence (AI) infrastructure. This has led to concerns about their spending, but the economics for cloud computing are favorable.
Amazon (AMZN), the world's largest cloud computing company, recently reported a payback on its AI chip and networking spending within two to three years. SpaceX (SPCX) also claims it can get its money back within one year.
We're looking at Amazon as a hyperscaler stock to buy, Microsoft as one to hold, and SpaceX as one to avoid.
Amazon's cloud computing business is accelerating growth with partnerships like OpenAI and Anthropic. It also has a strong proprietary custom-chip business, including its Trainium AI accelerators and Graviton central processing units (CPUs). This saves the company money on inference and reduces internal build costs.
Between its cloud computing growth, e-commerce strength, and large stake in Anthropic, Amazon's stock is a buy. The company also manufactures robots and is one of the largest digital advertisers.