Amazon Web Services, the cloud unit of tech giant Amazon (AMZN), sees a new opening in defense technology as the Pentagon begins rolling out Cybersecurity Maturity Model Certification 2.0, or CMMC. For context, the rule adds tougher cybersecurity requirements for defense contractors and businesses that work with the U.S. Department of Defense. That includes companies in aerospace, defense satellites, healthcare, manufacturing, and higher education.
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New trading tool for AMZN bullsWhen it comes to AWS, senior assurance consultant Paul Keastead said that the company is helping these organizations meet CMMC rules by providing security services, compliance documents, and infrastructure that lines up with the new standards. This is important because CMMC requirements are already appearing in some new contracts, with full implementation expected by 2028. Keastead said that the program changes how the Department of War manages cybersecurity across its supply chain, thereby creating challenges for contractors but also opportunities for those who adapt quickly.
For AWS, this fits into its plans for more government cloud business. Late last year, the company announced a $50 billion investment to expand AI and supercomputing for U.S. government customers, which includes 1.3 gigawatts of added compute capacity across AWS Top Secret, AWS Secret, and AWS GovCloud U.S. Region. In addition, Amazon recently won a $581.3 million U.S. Air Force contract under the Cloud One Program and later launched two federal credit programs worth up to $100 million to help agencies, national labs, and support organizations use AWS cloud and AI tools.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 45 Buys and two Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $315.09 per share implies 16.1% upside potential.
