The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

AMZN Stock Prediction

Summary:

The Unified Communication-as-a-Service industry is predicted to have a market size of $78.51 billion by 2020.

It is therefore not a surprise that Amazon wants to challenge Microsoft Skype’s long dominance in enterprise communication.

Amazon Chime is powered by Amazon Web Services and is an alternative to Skype for Business.

It is only proper that Amazon challenges Skype for Business since Microsoft’s Azure has been challenging Amazon Web Services.

AMZN still has positive market trend algorithmic forecasts from I Know First. This momo ticker is unlikely to suffer any steep stock price decline this year.

Amazon’s (AMZN) AWS IaaS (Infrastructure-as-a-Service) has endured stiff competition from Microsoft’s (Azure) Cloud product. It was expected that Amazon will retaliate against Microsoft’s continued encroachment on its cloud computing business. Chime from Amazon is Bezos’ first strike back against Microsoft in the enterprise market.

Like Skype, Amazon Chime is compatible with computers and devices that run Android, iOS, Windows, and Mac OS. Chime offers 1:1 and group chat, voice and video calls.

(Source: Amazon)

Microsoft’s Skype is a leader in Unified Communication-as-a-Service (UCaaS). The AWS-powered Amazon Chine online collaboration and video conferencing service will definitely become a rival of Skype for Business. Amazon involving itself in online communication is shrewd.

The UCaaS business is expected to become a $78.51 billion market by 2020. Getting just 3% share of global UCaaS spending will help Amazon earn new revenue stream of $2.3 billion/year. Sure, AWS grossed $12 billion last year but getting an additional $2.3 billion/year from Chime is definitely a sales boost for Amazon.

Together with Office 365, Skype for Business helped Microsoft become the undisputed leader in enterprise SaaS (Software-as-a-Service). By releasing Chime, Amazon could eventually become a leading player in Collaboration SaaS. As of now, Amazon is only a leader in IaaS. It is still a non-factor in the SaaS industry.

In order for Amazon to fully benefit from cloud computing, it needs to also become a noted provider of Software-as-a-Service. AWS should not be restricted to offering server hardware-for-rent to corporations. It should also host Amazon’s own fee-based software/apps for enterprise customers.

Why Amazon Needs To Compete With Skype

Amazon needs extra sales from Chime to offset future dips in its AWS sales. Microsoft is already the preferred choice for large enterprises. Pretty soon, AWS revenue will get affected by Microsoft’s aggressive price reductions for Azure and Windows Server.

Amazon needs a healthy, growing revenue stream from its cloud computing business segment. Competing with Microsoft on enterprise communication/collaboration software is a welcome diversification move. Like I said earlier, Amazon Chime could be generate 9-figure sales annually.

The current roster of AWS customers is a ready population for Amazon Chime. Price-wise, Amazon Chime is also affordable even for small business. This is great because AWS is the preferred choice of small and medium business. Amazon could offer discounts for its AWS IaaS plans if business customers will also sign-up for Chime.

(Source: Amazon)

Next Step For Amazon Is To Eventually Compete With Office 365

Going forward, maybe 3 of 5 years from now, Amazon will eventually have to offer an Office Suite with its Chime subscription. Microsoft bundles Skype for Business with Office 365. Chime’s attractiveness can also be enhanced if Amazon also bundles a productivity software with it.

If Amazon cannot compete with Office 365 on the enterprise, it can push its own subscription-only online productivity software to its 80 million Prime subscribers. It is true that many enterprise users are unlikely to drop Office 365 because that’s the industry-standard for them. On the other hand, home users are usually open to trying new software that is not from Microsoft.

The thought of Amazon achieving 1 or 2 million subscribers for its own $4.99/month productivity software is exciting. Taking away customers from Office 365 is one more way for Amazon to strike back against Microsoft’s growing encroachment in AWS’ leadership in IaaS.

Conclusion

I rate AMZN as a Buy. This e-commerce leader is shrewdly finding new ways to better monetize its AWS infrastructure. Amazon’s growth as a cloud computing leader is no longer limited to just leasing/renting server hardware and bandwidth. Chime is its first step toward becoming a SaaS player.

I Know First’s machine learning computers still rate AMZN as a Buy. The short and long-term market trend algorithmic forecasts all favor going long on AMZN right now.

My go-long Amazon endorsement is also echoed by 28 TipRanks-tracked Wall Street analysts. They have an average 12-month price target of $1,095.35. AMZN currently trades below $970.

(Source: TipRanks)

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Past I Know First Success With AMZN

I Know First has been bullish on AMZN shares in past forecasts. On December 20th, 2016, an I Know First Analyst wrote a bullish forecast on AMZN. Amazon has been diversifying its services outside of e-commerce. New initiatives such as ‘Amazon Go’ and ‘Amazon Now’ has been generating a lot of interest. Year-on-year revenue growth for Amazon has been impressive and thus reflects on the stock’s performance. Since then, AMZN shares have gained 25.31%. See chart below.

This bullish forecast for AMZN was sent to I Know First subscribers on December 20th, 2016. To subscribe today click here.