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Amazon Receives $800 Price Target from Morgan Stanley, Hits New Highs

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To begin with, there is absolutely nothing fluffy about cloud computing technology!

Initially used in telephony schematics to hide irrelevant details, the cloud symbol now represents the Internet in computing diagrams. The fundamental notion of cloud computing dates as far back as 1950, but gained popularity only in 2006, thanks to Amazon.comAMZN .

And now it is because of its cloud services - Amazon Web Services (AWS) - that everyone on Wall Street loves the e-tailer.

Brian Nowak, an analyst at Morgan Stanley, raised the price target for Amazon by 7% to $800 from $750 on the back of its cloud business. AWS contributed $2.1 billion to the company's third-quarter revenues as against $1.2 billion garnered in the year-ago quarter.

In a note, the investment bank stated that "AWS is driving and benefitting from accelerated public cloud adoption...We now include AWS in our best case valuation methodology".

After the increase in the price target, Amazon gained 2.1% to $673.86, a record high, in yesterday's trading session. This year, Amazon went up 117% and has an IBD Composite Rating of 98, the highest being 99.

Amazon is known for its gigantic e-Commerce business that allows customers to purchase almost any item which is delivered at the doorstep in two days.

Another growth driver is Prime subscription service. Prime users pay a yearly fee of $99 for benefits like free two-day shipping, special sales and Amazon Instant Video. Prime users typically try to use the service as much as possible (since they pay for it), thus boosting sales for Amazon.

Nevertheless, AWS, a cloud infrastructure service that Amazon only recently separated from its core business, contributes a major share - about 50% - of its profits. The success of its multi-faceted cloud computing service significantly boosted the company's results in the third quarter.

Furthermore, with many businesses and services shifting toward cloud-based technologies, AWS will continue to grow and generate more profits for Amazon.

Amazon holds a Zacks Rank #2 (Buy). Other stocks in the technology space worth considering are Facebook, Inc. FB , Blue Nile Inc. NILE , and PetMed Express, Inc. PETS . All these stocks sport the same rank as Amazon.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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