Amazon.Com, Inc. (NASDAQ: AMZN) is establishing cloud regions in Southeast Asia in response to customer demands for secure local data storage.
"The reason for this is that many of our customers have been asking for that. They really wanted something local such that they can meet, for example, local data storage requirements, or protection of personal identifiable information," CNBC cites from Amazon's Chief Technology Officer Werner Vogels' interview.
Amazon Web Services (AWS), Amazon's cloud computing division, led the global cloud service market in the fourth quarter, capturing 31% of total cloud spending, says a Canalys report according to CNBC.
An AWS region consists of a physical location with clusters of data centers. Each area contains at least three separate availability zones, each equipped with power, cooling, and physical security and connected by redundant, ultra-low-latency networks.
Vogels noted that startups, large enterprises, and government agencies seek local technological deployments.
In November, Amazon announced the launch of a new AWS Region in Malaysia and committed to investing 25.5 billion Malaysian ringgit ($6 billion) by 2037. This investment supports the Malaysian government's goal of transforming the country into a high-income digital economy by 2030.
Following the opening of cloud regions in Indonesia in December 2021 and Singapore in 2010, AWS plans to introduce an infrastructure region in Thailand.
AWS already operates multiple regions across various global locations, including North America, South America, Europe, China, Asia Pacific, South Africa, and the Middle East.
Analysts have flagged Amazon's leading position in generative AI, predicting significant advantages from its development of AI chips and diverse large language model offerings.
For AWS, a quarter-over-quarter growth of $545 million and a 16% year-over-year increase are likely slightly ahead of the market's 15% expectation.
They highlighted potential growth from AWS, advertising, and outperformance in the retail segment, with AWS expected to achieve a 16% year-over-year increase, slightly surpassing market expectations. Analysts also remain optimistic about Amazon's eCommerce growth, supported by increased U.S. online spending and new developments like Prime Video ads and AI enhancements at the upcoming Worldwide Developer Conference.
Amazon stock gained over 69% in the last 12 months. Investors can gain exposure to the stock via SPDR Select Sector Fund - Consumer Discretionary (NYSE: XLY) and Vanguard Consumer Discretion ETF (NYSE: VCR).
Price Action: AMZN shares traded higher by 0.43% at $180.31 premarket on the last check Wednesday.