Wall Street veteran Paul Meeks of Saturna Capital appeared on CNBC’s Squawk Alley Friday morning, sharing some interesting insights about two of the titans in cloud computing: Microsoft and Amazon.com.
And while Amazon Web Services is the industry leader today — posting a whopping $391 million in operating income on revenue of $1.8 billion last quarter — Meeks seems to like the opportunity in front of Microsoft (at least in terms of potential upside for the stock).
“I am not really interested in Amazon,” said Meeks, who prior to Saturna served as managing director at Merrill Lynch Investment Managers. “I do give them a lot of credit with Amazon Web Services. However, I think that particular play in infrastructure-as-a-service, you might get a better valuation with Microsoft than Amazon.”
Pressed on that point by the CNBC anchor, Meeks added:
“It is interesting that years ago, everyone thought that Amazon was an e-commerce play, and I bet a decade from now you are going to say: Amazon is an Amazon Web Services play, and, oh by the way, they have an e-commerce business, too,” he said.
Even so, Amazon may be a bit too rich for Meeks and others. The stock is trading near an all-time high of $520 per share, with a market value of $248 billion. Microsoft, meanwhile, is valued at $373 billion.
Under CEO Satya Nadella, Microsoft is making a huge push into the cloud. Microsoft is on pace to have its commercial cloud business hit $20 billion in revenue by the end of 2018. In the past quarter, the company’s cloud business hit $1.7 billion in revenue.
Meeks, who resides in Bellingham, said his biggest holding right now is Facebook, and he’s looking to pick up more shares if the stock dips.
“Every time that they announce, it seems like their lead is growing larger and larger,” he said. “I am very excited about their growth.”