DoD contracts shows competitiveness of cloud industry, says Citi

Yesterday, the Department of Defense announced that it had awarded its $9B Joint Warfighting Cloud Capability contract to Amazon’s (AMZN) AWS, Microsoft (MSFT), Google (GOOG), and Oracle (ORCL), Citi analyst Ronald Josey tells investors in a research note. The contract replaces the prior $10B JEDI contract that was awarded to Microsoft in 2019 and subsequently cancelled in July 202, Josey tells investors in a research note. Given four cloud providers were awarded a portion of the JWCC, it highlights just how competitive the cloud industry continues to be and the increasing adoption of the multi-cloud approach among buyers, says the analyst. He believes that while AWS remains the leader across the broader cloud sector in terms of products, capabilities, and scale, the JWCC contract is likely to be a boost to each provider’s public sector practice. Josey recognizes growth at AWS is decelerating. However, given product innovation and its $104B of commitments, along with retail wallet share gains and the shares down 20% since Q3 earnings, he keeps a Buy rating on Amazon with a $145 price target.