Wall Street expects Amazon's fastest growing business to triple its sales by 2018
The cloud computing service has grown nearly 80% year-over-year in the last two quarters, and is on pace to hit $7.8 billion in revenue in 2015, four times the 2012 sales of $1.8 billion.
And don't expect it to slow down anytime soon.
In a note published on Tuesday, Pacific Crest wrote that it expects AWS sales to triple in the next three years, generating more than $25 billion by 2018.
The bullish projections are based on AWS's aggressive expansion plans announced recently. AWS plans to expand into 5 new regions this year, bringing its worldwide presence to 16 total regions. This is the first time since 2011 that AWS expanded to more than 4 new regions in a single year.
The note stressed that expansions are not cheap, and that it could put a strain on Amazon's operating margin in the near term. But it said the investments will return as huge AWS growth in 2017 and 2018.
"There is a natural time lag between breaking ground on a new data center and when revenue recognition can occur," the note said. "We see investments in 2016 as the potential catalyst to re-accelerate growth and share gains in 2017 and 2018."
Pacific Crest added that demand for AWS captured nearly half of the cloud revenue generated by the top 10 cloud providers in the third quarter of 2015, as demand for its service remains "very strong" across big enterprises. Large companies like GE, John Deere, and Capital One are all major customers of AWS now.
This map by Pacific Crest should give you an idea for AWS's growing presence across the world:
