Prof G Markets Is Amazon Losing Its Edge? What the AWS Outage Means for the Cloud Wars
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Oct 21, 2025 
Mark Mahaney, Head of Internet Research at Evercore ISI, delves into the recent AWS outage, discussing the reputational impact on Amazon and its crucial role in the cloud market. He highlights how this incident might signify a leadership challenge for AWS amidst fierce competition. Maurice Obstfeld, Professor Emeritus at Berkeley, examines the ongoing economic effects of tariffs, revealing unmet goals and the burden they place on consumers. Together, they provide a revealing look at cloud dynamics and trade policies.
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Internet Reliance On AWS Is Concentrated
- The AWS outage revealed how deeply the internet depends on a single provider for core infrastructure.
- A regional error in Virginia cascaded into millions of global system failures, showing fragility in concentrated cloud reliance.
Outages Hurt Perception More Than Immediate Value
- The outage is a public relations setback but markets may tolerate isolated incidents if AWS recovers quickly.
- Prolonged or repeated outages would likely change investor sentiment and weigh on Amazon's stock.
AI Narrative Drives AWS Valuation Gap
- Amazon's valuation drag stems mainly from doubts about AWS's AI positioning and slower growth versus rivals.
- Investors treat AI-cloud leadership as a key determinant of tech multiples and are waiting for AWS growth reacceleration.