VMware (VMW) Cloud Solutions Now Available in AWS Market Place

VMware VMW and Amazon’s AMZN strategic alliance will now enable customers to purchase and utilize VMWare Cloud on Amazon Web Services (“AWS”).

VMWare announced that the VMWare cloud can be purchased by AWS customers in the AWS marketplace, effective immediately. VMWare is offering customers flexible purchasing and consumption options to deploy VMWare Cloud and other complementary solutions such as VMWare vRealize Cloud Management and VMware Tanzu.

This alliance will integrate the world-leading private cloud of VMware with AWS’ leading public cloud. As a result, customers will be able to preserve their investments in existing applications and operate seamlessly in hybrid IT environment without having to purchase custom hardware, rewrite applications or modify operating models.

Partnerships Drive VMware’s Cloud Customer Base

VMware’s expanding cloud customer base is being driven by partnerships, which was reflected in the last reported quarter.

The company has been gaining from the ongoing cloud-based digital transformation and increasing traction witnessed for subscription and software-as-a-service (SaaS) offerings.

In the year-to-date period, VMware’s shares have fallen 1.6%, compared with the Zacks Computer - Software industry’s and the Zacks Computer and Technology sector’s decline of 14.9% and 15.7%, respectively.
 

VMware, Inc. Price and Consensus

VMware, Inc. price-consensus-chart | VMware, Inc. Quote

In the fourth quarter of fiscal 2022, Subscription & SaaS revenues (45.6% of segment revenues) increased 22.8% year over year to $868 million.

The subscription and SaaS business is expected to be driven by ongoing momentum in fiscal 2023, courtesy of robust uptake of modern applications, VMware Cloud Provider Program, End-User Computing, Carbon Black and VMware Cloud on Amazon Web Services.

The recent alliance between VMware and AWS will allow customers to reduce the time, cost and risk of migrating vSphere workloads to public clouds utilizing vMotion and HCX. It will enable enterprises to save on the total cost of ownership compared to traditional on-premises infrastructure and on-demand consumption options, thus attracting customers.

DXC Technology DXC, an AWS consulting partner, was one of the first companies to use this service and launch a multitenant cloud using VMware on AWS in Australia.

The availability of VMware on the AWS marketplace will allow DXC technology to seamlessly help its customers globally migrate to a hybrid cloud environment in a cost-effective manner without disturbing regular operations.

However, this recent service provided by VMWare will lead to a significant investment by VMware in engineering, operations, support and sales resources, consequently increasing overall operating cost. This might get reflected in first-quarter 2023 bottom line.

Zacks Rank and a Stock to Consider

VMware currently carries a Zacks Rank Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Here is a better-ranked stock worth considering in the broader Computer and Technology Sector.

Axcelis Technologies ACLS carries a Zacks Rank #2 (Buy).

Axcelis shares have fallen 12.9% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s and the Computer and Technology sector’s decline of 12.2% and 15.7%, respectively.

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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.