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Amazon Boosts Satellite Initiatives With Lockheed Martin Deal

Amazon’s AMZN strong efforts toward innovation of its cloud services driven by strategic partnerships are strengthening its presence in the global cloud market.

The company’s cloud computing arm Amazon Web Services (“AWS”) has extended its tie up with Lockheed Martin LMT to expand reach in satellite data.

The deal enables AWS to introduce a new antenna service to its platform by combining its recently launched AWS Ground Station service with Lockheed Martin’s Verge antenna network.

Partnership to Benefit

Notably, the latest partnership is a win-win situation for both the companies.

The integrated solution will enable the AWS customers to download data from multiple satellites at a single point of time with the help of Verge. With this, AWS will facilitate the accessibility of crucial satellite data.

Further, customers of Lockheed Martin which primarily comprise satellite operators will be able to upload their data with the aid of AWS Ground Station, consequently integrating massive satellite data with the AWS services.

We believe the two-way benefits are likely to accelerate the adoption of AWS Ground Station.

Further, the move will enable AWS to provide low latency to its customers for processing the satellite data, backed by AWS Ground Station antennas that are co-located with AWS Regions. This will also provide access to other AWS services in this regard.

Additionally, the latest move will aid Amazon in gaining traction among the satellite operators, government organizations and clients in highly regulated industries.

All these factors are likely to drive the top-line growth of high-margin generating AWS. Notably, AWS revenues surged 45.7% year over year to $6.68 billion in third-quarter 2018.

Coming to the price performance, shares of Amazon have returned 43.5% on a year-to-date basis, outperforming the industry’s rally of 4.9%.

Deepening Focus Toward Satellite & Space

AWS has been eyeing the satellite and space area for quite some time now in a bid to explore the opportunities of space. Per Reuters, the company intends to utilize its 12 antennas in direct transmission of data from satellites to its data centers. This is in sync with its latest move.

Apart from this, Amazon is in talks with the president of Chile to house and mine astrodata from Chile’s giant telescopes. Moreover, Amazon hosts cloud platform for the Hubble Telescope’s data and the International Centre for Radio Astronomy Research in Australia.

Further, AWS won a contract from Iridium Communications IRDM to develop a satellite-based network called CloudConnect for Internet of Things (IoT) applications. Notably, this has provided an opportunity for AWS to develop satellite-based cloud applications.

Moreover, the company is aggressively looking to hire people who can work on its new space and satellite initiative, namely interconnecting space system networks.

Notably, these robust endeavors are likely to strengthen the AWS’ services portfolio which in turn will aid its dominant position in the cloud market.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector that can be considered is Adobe Systems ADBE which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for Adobe Systems is pegged at 16.4%.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
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