Oppenheimer says channel checks support below-consensus AWS estimates

Oppenheimer analyst Jason Helfstein is confident in 2023/2024 AWS revenue estimates 3%/5% below consensus given customers are transitioning on-demand billing to discounted term contracts; optimizing workloads; decreasing volume/usage as the digital economy reverts somewhat back to in-person; reduced funding for startups/SaaS/Internet companies; and new application porting decelerating. Customer revenue shortfalls began in September, the firm adds. Oppenheimer’s channel checks confirm further revenue pressure from all the above, particularly from more term contracts, with peak impacts hitting mid-2023. The firm estimates a two-year revenue impact of about 15%, but this is essentially a one-time correction. Despite the near-term headwinds, Oppenheimer remains very positive on AWS long-term. The firm has an Outperform rating on Amazon with a price target of $130.