Amazon's Cloud Business Continues to Accelerate Amidst Cyclical Chip Pricing

The market is experiencing pressure due to rising interest rates and semiconductor price fluctuations. This has led to a decline in the VanEck Semiconductor ETF (SMH), which is down over 4%. However, there are signs of rotation into pharmaceuticals and retail sectors.

A closer look at Amazon.com (AMZN) reveals that it hit an all-time high on August 3 but has since given back about 10% without any negative news or guidance changes. The company's cloud business, Amazon Web Services, is accelerating despite its large size, with a growth rate of almost 37% last quarter.

The pressure on Amazon and other big cloud companies comes from the rising cost of memory chips, which has increased the spending required to build data centers. However, this is seen as a cyclical issue that will eventually break, providing an opportunity for buying.