Most of us never think about where our emails, photos, or bank records are stored. We simply trust the companies that store them.
However, governments can’t afford the same luxuries. When files belong to a military alliance, who holds the keys becomes a matter of national security. That's why defense agencies have been slow to transition to cloud-based storage, driven primarily by security concerns.
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Now, Amazon (AMZN), one of the biggest names in tech, has cleared a significant hurdle.
www.barchart.com AWS Growth Sets the Stage
Amazon Web Services is Amazon's cloud segment. It rents computing power, storage, and AI tools to companies and governments so they don't have to build their own data centers.
Presently, that business is growing at an enviable pace. Here's what Amazon reported during its second-quarter earnings call on July 30:
AWS revenue hit $42.2 billion, up 36.7% from a year earlier. Growth sped up for the fifth straight quarter, the fastest pace in 18 quarters. AWS's annualized revenue is close to $169 billion. As a standalone company, CEO Andy Jassy said, it would rank 24th on the Fortune 500 list. The backlog stands at $496 billion, more than double what it was a year ago.The backlog provides investors with revenue visibility. Notably, AWS is a key driver of the tech giant's top-line growth.
AWS Lands a NATO First
AWS says it has become the first cloud provider approved for use by all North Atlantic Treaty Organization (NATO) member nations when handling information at the NATO RESTRICTED (NR) level, according to a company statement.
In plain terms, NATO, its defense industry partners, and every member nation can now use approved AWS services for NR workloads. They can do so in any AWS Region located in a NATO member nation.
The company highlighted two big benefits:
A shared starting point: Because the approval is published across the alliance, members inherit a common, already assessed security baseline. AWS said this should cut the time, effort, and cost of meeting compliance rules. A faster path for allies: NATO nations get a quicker route to accredit AWS through their own national process.“Strengthening NATO's ability to securely leverage commercial technology is key to build a more resilient and agile Alliance,” said Dylan Browne, general manager of the NATO Communications and Information Agency (NCIA).
David Appel, acting vice president of Worldwide Public Sector at AWS, described the approval as the result of a sustained effort spanning several years. “We believe governments, and the citizens they serve, deserve access to the same infrastructure and services driving innovation in the private sector,” Appel said.
AWS had to document its compliance against D32, NATO's technical directive that sets the security rules for handling NR information in the public cloud, according to the statement.
From there, the steps looked like this:
Spain's National Cryptographic Center (CCN) evaluated the AWS capabilities. NATO approved them and published the approval to all Allies. Final accreditation is handed off to a member nation, the NCIA as a NATO host nation, or both.AWS currently has 15 Regions in NATO member nations, and seven of them are located in mainland Europe.
Defense customers can get started through the AWS Trusted Secure Enclave Sensitive Edition, which AWS calls the foundation for this announcement.
What the NATO Win Means for Amazon
AWS already serves more than 15,000 government customers, per the statement. A seal of approval from a military alliance adds weight to that list. Amazon didn't share any dollar figures tied to the approval. So investors shouldn't expect it to move the revenue needle significantly.
The bigger story is trust. Jassy told analysts that customers pick AWS partly because it has “the strongest security and operational performance.” A NATO first backs up that pitch publicly.
There's a flip side for shareholders. Amazon now plans to spend about $220 billion on capital projects in 2026, up from an earlier estimate of about $200 billion, largely because memory chips cost more.
Jassy admitted this heavy spending creates free cash flow headwinds until new data centers come online. Over the next two years, Amazon's free cash outflow is expected to total roughly $40 billion. Even so, he said Amazon still won't have enough capacity to meet demand in 2026 and likely 2027 as well.
Jassy also laid out a bold target. He now believes AWS could very possibly become a $1 trillion annual revenue business in time. A single approval won't get AWS there. But for a business built on trust, NATO's green light is a strong signal that even the most cautious customers are ready to move in.
What Analysts Are Saying About AMZN Stock
Analysts tracking AMZN stock forecast revenue to increase from $717 billion in 2025 to $1.37 trillion in 2030, indicating a compounded annual growth rate of almost 14%. Over this period, adjusted earnings per share is projected to grow from $7.17 to $19.07, translating to a CAGR of over 21%. If AMZN stock trades at 25x forward earnings, below its five-year average of 49x, it could double within the next 40 months.
Out of the 56 analysts covering AMZN stock, 47 recommend “Strong Buy,” six recommend “Moderate Buy,” and three recommend “Hold.” The average AMZN price target is $326.55, above the current price of about $249.
www.barchart.com On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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