Amazon Web Services: A knockout performance in Q4

Amazon Web Services continued its winning ways in Thursday's earnings by racking up $9.95 billion in Q4, which beat analysts' expectations. AWS' fourth quarter revenues marked a 34% increase over the same quarter a year ago, and exceeded analyst projections of $9.81 billion, according to FactSet.

"We grew from a $30 billion revenue run rate at the end of 2018 to a $40 billion revenue run rate at the end of 2019," said Amazon CFO Brian Olsavsky, according to a Seeking Alpha transcript. "So, we continue to be happy with our top line growth. In dollar terms as opposed to percentages, we had a larger dollar increase in revenue both year-over-year and quarter-over-quarter. So, we're very happy with the progress of the revenue and our adoption and acceptance by customers."

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AWS is still far and away the dominant cloud provider in the marketplace, followed by, respectively, Microsoft Azure and Google Cloud Project. Microsoft reported its second quarter earnings on Wednesday, which included Azure's revenue growing by 62%, which was a sequential increase over 59% in the prior quarter. Microsoft doesn't breakout Azure's revenues. Google will release its earnings on Monday.

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After the cloud providers reported their third quarter earnings last year, Amazon’s market share remained at around the 40% mark. While Microsoft, Google and Alibaba slowly gained ground in the third quarter, even if their market shares were combined they would still trail Amazon by a wide margin, according to Synergy Research Group.

AWS has been a growing piggy bank for Amazon as it accounts for 11% of the company's total revenues. In Amazon's fourth quarter operating income of $3.88 billion, AWS accounted for $2.60 billion, or 67%. AWS' operating income eclipsed the $2.45 billion consensus estimate among analysts, according to FactSet.

During the conference call with analysts, Olsavsky credited AWS' continued success to its large installed based of customers and its evolving portfolio of products and services.

"It's kind of the culmination of a lot of work on adding new products and features, adding to our sales and marketing teams and having better penetration in enterprise customers and hitting a lot of very different industries," he said. "So, I think that's what you're seeing. We feel that our product set leads the market, and we add to it at a quicker pace than our competition. So actually the gap on capacity and features is growing as we speak."