Amazon Web Services just proved it still has a few tricks up its sleeve

Amazon’s cloud-computing business is one of the company’s most important money makers, but lately it’s also given analysts reason to worry.

Since mid-2015, the rate of growth in Amazon Web Services (AWS) has slowed steadily each quarter. For most of 2017, the unit delivered big numbers—$3.7 billion in revenue in the first quarter, $4.6 billion in the third—but it did so at a decreasing rate. The worry was that Amazon had been forced to cut prices to compete with other vendors, which was slowing sales growth.

That just changed.

For the fourth quarter of 2017, Amazon reported $5.1 billion in revenue for AWS, beating estimates analysts surveyed by FactSet, who had expected $5 billion. For the first time since the second quarter of 2015, AWS’s growth rate accelerated, with sales up 44.6% year-over-year, compared to 41.9% year-over-year growth in the previous quarter. You can see the uptick in this chart:

Cloud-computing is generally considered a commodity business, meaning the competition is largely on price, which is continually driven lower. AWS competes against IBM Bluemix, Microsoft Azure, and Google Cloud, among others. In a Jan. 26 research note, Morgan Stanley analysts noted in their risks to the Amazon bull case that “price wars” with competitors “may lead Amazon to cut AWS prices further while incremental AWS investment offsets cuts elsewhere.” As a standalone segment, Morgan Stanley believes AWS is worth about $273 billion, or $550 a share.

Amazon’s investment in AWS is readily apparent in its fourth-quarter earnings release. Of the 50 bullet-pointed “highlights” the company shared, 19 were related to AWS. They included the launch of new AWS enterprise clients (Expedia, Ellucian, DigitalGlobe), an expansion of AWS infrastructure (a new region in France, a second region in China), and the introduction of four artificial intelligence services to help developers.

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