Amazon's AI Push and Cloud Growth Drive Stock Surge Amid Intense Competition

Amazon's SWOT analysis: stock soars on AI push, cloud growth By Investing.com

Amazon.com, Inc. (NASDAQ:AMZN) has been making waves in the tech industry with its recent financial performance and strategic initiatives. The e-commerce and cloud computing giant has seen its stock price climb as analysts raise their price targets, reflecting growing confidence in the company's ability to leverage artificial intelligence (AI) and maintain its market leadership position. Amazon's third-quarter results for 2024 have surpassed expectations, with the company reporting higher than anticipated EBIT (earnings before interest and taxes) for both Q3 and Q4 2024. The Q4 2024 EBIT guidance of $16-20 billion beat Street estimates by 3% and surpassed Buyside expectations of $16.5 billion. This strong performance has led to multiple analyst upgrades and increased price targets. The company's net sales reached $159 billion in Q3, representing an 11% increase year-over-year. Operating income was reported at $17.4 billion with an 11% margin, surpassing expectations. These results demonstrate Amazon's ability to drive growth while improving profitability across its various segments. Amazon Web Services (AWS) continues to be a significant driver of the company's success. In Q3 2024, AWS revenue growth remained stable at 19% year-over-year, excluding foreign exchange impacts. While some analysts note that the future acceleration path for AWS remains uncertain, the segment's performance remains strong compared to competitors. The company's increased capital expenditure guidance for 2024, set at approximately $75 billion, is primarily focused on AWS to support the growing demand for AI services. This investment in AI infrastructure is expected to position Amazon well for future growth in the cloud computing market. Amazon's core retail business has shown robust fundamentals, supporting sustained margin expansion and positive EBIT revisions. The company achieved significant margin expansion in its retail business during Q3 2024, driven by fixed cost leverage and efficiency gains in logistics. International margins expanded by 360 basis points year-over-year in Q3 2024, demonstrating the company's ability to improve profitability in its global operations. The growth in Prime memberships and strong performance in advertising revenue, which reached $14.3 billion in Q3 (up 18.8% year-over-year), further contribute to the company's positive outlook. Amazon's Project Kuiper, initiated in 2018, aims to provide broadband internet via satellites in low Earth orbit (LEO). The company plans to offer three customer terminal options with varying speeds up to 1Gbps. With over 2,000 employees working on the project and FCC (BME:FCC) approval for a constellation of 3,236 satellites, Project Kuiper represents a significant investment in future growth opportunities. Prototype satellites were successfully launched in 2023, with full-scale launching missions planned for early 2025. While this project requires substantial capital investment, it has the potential to open new revenue streams for Amazon in the coming years. Amazon continues to invest in its supply chain, focusing on new fulfillment centers and small sortable facilities to manage excess capacity and delay payroll expenses. The company is making strides in same-day shipping by building more fulfillment centers in mid-sized cities and improving regional distribution efficiency. To address rising labor costs across the industry, Amazon is implementing robotic picker arms to automate sorting and reduce labor costs over the next decade. These automation efforts are expected to lower one-day shipping costs and improve overall operational efficiency. Despite facing increasing competition from tech giants like Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) in the cloud computing space, and retail competitors such as Walmart (NYSE:WMT), Amazon maintains its leadership position in both e-commerce and cloud services. The company's continued investment in AI and its vast ecosystem of products and services provide a strong competitive advantage. As Microsoft's Azure and Google Cloud continue to gain market share, AWS may face challenges in maintaining its current growth rate. The recent capacity constraints reported by Microsoft for its Azure services highlight the intense demand for cloud computing resources. While AWS has invested heavily in building capacity, it may need to continually increase capital expenditures to stay ahead of competitors, potentially impacting profitability. Amazon's significant investments in automation and robotics, while aimed at reducing long-term labor costs, require substantial upfront capital. The company's increased capital expenditure guidance for 2024 and beyond reflects these investments. In the short to medium term, these costs, combined with rising labor expenses across the industry, could put pressure on Amazon's margins, particularly in its retail operations. Amazon's substantial investments in AI infrastructure, particularly within AWS, position the company to capitalize on the growing demand for AI-powered services. These investments are expected to drive growth not only in cloud computing but also across Amazon's retail and advertising segments. AI-driven improvements in product recommendations, inventory management, and targeted advertising could lead to increased efficiency and revenue growth across the company's ecosystem. Amazon's continued investment in its fulfillment network and focus on improving delivery times, particularly with same-day shipping initiatives, strengthen its position in the e-commerce market. The company's expansion into international markets, as evidenced by improving margins in its international segment, suggests potential for sustained growth. Additionally, new ventures like Project Kuiper could open up entirely new revenue streams, diversifying Amazon's business beyond traditional e-commerce and cloud services. Amazon's strong financial performance, continued investments in AI and cloud infrastructure, and strategic initiatives like Project Kuiper have led to a generally positive outlook among analysts. The company's ability to maintain growth in its core businesses while expanding into new areas positions it well for future success, despite potential challenges from increased competition and regulatory scrutiny. This analysis is based on information available up to November 5, 2024. Gain an edge in your investment decisions with InvestingPro's in-depth analysis and exclusive insights on AMZN. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore AMZN's full potential at InvestingPro. Should you invest in AMZN right now? Consider this first: Investing.com's ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if AMZN is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level. To evaluate AMZN further, use InvestingPro's Fair Value tool for a comprehensive valuation based on various factors. You can also see if AMZN appears on our undervalued or overvalued stock lists. These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

Amazon: Opportunities through strong growth in cloud and AI business | Investing.com UK

Thanks to its cloud division AWS, Amazon (NASDAQ:AMZN) is posting impressive profit growth and shows enormous potential for the future. In the last quarter, operating profit rose by more than 50% to $17.4 billion, exceeding expectations. This positive development is reflected in a strong increase in Amazon's share price and strengthens the company, which is now one of the most valuable in the world, with a market capitalisation of almost $2 trillion. AWS as a success factor The cloud division AWS remains a key profit driver for Amazon. In the third quarter, operating profit here grew by almost 50% to 10.4 billion dollars, while revenues rose by 20% to 27.5 billion dollars. AWS ensures Amazon a strong competitive position in the cloud market and offers numerous opportunities: in addition to stable revenue growth, Amazon benefits from the global demand for cloud solutions as more and more companies are moving their IT infrastructure to the cloud. AWS remains a driving force for the company's overall performance and is constantly opening up new business opportunities. Investments in artificial intelligence as a growth lever CEO Andy Jassy has announced extensive investments in the field of artificial intelligence. With a budget of 75 billion dollars for data centres and AI infrastructure, Amazon is focusing squarely on this future technology, which, according to Jassy, offers a 'unique opportunity'. The planned investments optimally position Amazon to compete with Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) and could enable Amazon to play a leading role in the field of AI-based cloud services. Demand for AI applications is increasing worldwide, which gives AWS and thus Amazon additional tailwind. Rising revenues in retail and advertising Amazon also shows potential outside of the cloud business. The retail business and advertising revenues increased significantly, which shows that Amazon can continue to grow in its core business as well. In the current quarter, the company expects revenues of up to $188.5 billion and an operating profit of between $16 and $20 billion, which should further support the growth momentum. And what does this mean for us as investors? Amazon's share price fully reflects the company's positive performance. In the long term, we expect significant price gains. In the short term, the share price could fall back again somewhat. However, it is important that it does not fall below $180.25, as this would break the upward trend. Those planning to buy should stay on the sidelines now and take the opportunity. You can find a detailed analysis of Amazon, including the long-term outlook, on our website. Disclaimer/Risk warning: The information provided here is for informational purposes only and does not constitute a recommendation to buy or sell. It should not be understood as an explicit or implicit assurance of a particular price development of the financial instruments mentioned or as a call to action. The purchase of securities involves risks that may lead to the total loss of the capital invested. The information provided does not replace expert investment advice tailored to individual needs. No liability or guarantee is assumed, either explicitly or implicitly, for the timeliness, accuracy, appropriateness or completeness of the information provided, nor for any financial losses. These are expressly not financial analyses, but journalistic texts. Readers who make investment decisions or carry out transactions based on the information provided here do so entirely at their own risk. The authors may hold securities of the companies/securities/shares discussed at the time of publication and therefore a conflict of interest may exist.

Baird optimistic on Amazon stock as AI demand surges and costs stay in check By Investing.com

On Friday, Baird, a financial services firm, increased its price target on Amazon.com (NASDAQ:AMZN) shares to $220 from the previous $213, while maintaining an Outperform rating on the stock. The adjustment follows Amazon's recent third-quarter earnings report, which the analyst believes presented sufficient positive aspects to outweigh any potential concerns regarding the growth of Amazon Web Services (AWS). In their assessment, the analyst noted that demand for AI-related services is outstripping capacity, which is a positive sign for Amazon. The company is also witnessing robust cloud migrations as businesses gear up to integrate more advanced AI, or GenAI, capabilities. This indicates a strong ongoing demand for Amazon's cloud services. The report highlighted that the standout performers for Amazon were its online stores, international operations, and operating margins. These sectors performed better than anticipated, with AWS margins benefiting from cost control and economies of scale. Operational expenses are expected to increase next year, but for the moment, AWS is seeing the advantages of disciplined spending. Additionally, Amazon's e-commerce segment is gaining from an uptick in consumables sales and an improved cost-to-serve metric. The analyst concluded by emphasizing the effectiveness of Amazon's business model, stating, "The flywheel is spinning, we continue to like the stock." This comment reflects a positive outlook on Amazon's ability to sustain its growth momentum and profitability through its various business segments. In other recent news, Amazon.com, Inc. has experienced a series of revisions in its stock target by multiple financial firms. Citi raised its target for Amazon to $252, citing confidence in the company's growth, while BofA Securities increased its target to $230, highlighting the company's gains in artificial intelligence (AI) and efficiency. DA Davidson maintained a steady target of $235, emphasizing the growth of Amazon Web Services (AWS) and recovery in the retail sector. Cantor Fitzgerald also increased its target to $240, following Amazon's third-quarter results that exceeded expectations. These adjustments come on the heels of Amazon's third-quarter earnings report, which demonstrated significant growth in AWS and a strong recovery in the retail segment. Amazon's revenue reached $159 billion, marking an 11% year-over-year increase, and the company's operating income surpassed consensus estimates. AWS reported a year-over-year growth of 19%, and the company's retail operating margins increased by 0.9% quarter over quarter. Analysts from firms such as Citi, BofA Securities, DA Davidson, and Cantor Fitzgerald have expressed confidence in Amazon's strategic investments and its ability to generate higher growth. They highlighted Amazon's advancements in retail efficiency and AI, which have contributed to margin improvements and potential future growth. The recent developments reflect a positive outlook on Amazon's continued financial growth and operational efficiency. However, these are projections from analysts, and actual results may vary. Amazon's recent performance aligns with several key metrics and insights from InvestingPro. The company's revenue growth of 12.32% over the last twelve months and 10.12% in the most recent quarter supports Baird's positive outlook on Amazon's business momentum. This growth is particularly impressive given Amazon's already substantial revenue base of $604.33 billion. InvestingPro Tips highlight that Amazon is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.2. This suggests that the stock may be undervalued considering its growth prospects, which could justify Baird's increased price target. Additionally, Amazon's status as a "prominent player in the Broadline Retail industry" underscores its strong market position, aligning with the analyst's confidence in the company's business model. The company's robust financial health is evident from its ability to cover interest payments with cash flows and its operation with a moderate level of debt. This financial stability positions Amazon well to invest in AI and cloud capabilities, as mentioned in the Baird report. For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into Amazon's investment potential.

Microsoft's SWOT analysis: azure growth, ai investments shape stock outlook By Investing.com

Microsoft Corporation (NASDAQ:MSFT), a leading technology company known for its software products, cloud services, and hardware offerings, continues to navigate a complex landscape of opportunities and challenges. Recent financial results and analyst reports provide insights into the company's performance and future prospects, particularly in the rapidly evolving fields of cloud computing and artificial intelligence (AI). Microsoft's cloud platform, Azure, remains a key focus for investors and analysts. Recent reports indicate that Azure's growth, while still robust, has shown signs of deceleration. In the most recent quarter, Azure grew by 33-34% year-over-year in constant currency, slightly above expectations but down from previous quarters. This performance has raised questions about the sustainability of Azure's growth trajectory. The competitive landscape in cloud services remains intense, with Amazon (NASDAQ:AMZN) Web Services (AWS) and Google (NASDAQ:GOOGL) Cloud Platform (GCP) presenting strong challenges to Microsoft's market position. Some analysts suggest that Microsoft's early lead in generative AI and cloud services may be diminishing as competitors catch up. AI integration has become a significant driver of Azure's growth, with AI services contributing an estimated 12 percentage points to Azure's overall growth. Microsoft expects its AI-related revenue to reach approximately $10 billion in annual recurring revenue in the near future, underscoring the importance of AI to the company's growth strategy. Microsoft's overall financial performance remains strong, with recent quarterly results exceeding expectations across various metrics. The company reported total revenue of $65.6 billion, representing a 16% year-over-year increase. Earnings per share (EPS) also showed healthy growth, increasing by 10% year-over-year to $3.30. However, the company's capital expenditures have raised some concerns among analysts. Microsoft has significantly increased its investments in data center capacity and AI infrastructure, with capital expenditures rising to $20 billion in the most recent quarter. While these investments are seen as necessary to support future growth in cloud and AI services, some analysts worry about the potential impact on margins and free cash flow. Beyond cloud and AI, Microsoft's diverse product portfolio continues to perform well. The Microsoft 365 Commercial segment grew by 16% in constant currency, demonstrating the ongoing strength of the company's enterprise software offerings. The gaming division, anchored by Xbox, also showed strong performance, contributing to overall revenue growth. Looking ahead, Microsoft faces both opportunities and challenges. The company is well-positioned to capitalize on the growing demand for AI services and the ongoing trend of cloud adoption in enterprises. The upcoming release of new AI infrastructure, such as the Blackwell GPU, is expected to increase Azure's capacity and potentially drive reacceleration in growth. However, Microsoft also faces intensifying competition in the AI and cloud markets. The company's reliance on third-party hardware, particularly from NVIDIA (NASDAQ:NVDA), for its AI infrastructure has been noted as a potential weakness. Some analysts suggest that this dependence could shift value from Microsoft to hardware providers like NVIDIA. The deceleration in Azure's growth rate is a concern for investors and analysts. As a key driver of Microsoft's cloud business, any slowdown in Azure could have ripple effects on the company's overall revenue growth and market position. If Azure's growth continues to decelerate, it could lead to reduced investor confidence and potentially impact Microsoft's valuation multiples. Microsoft's significant investments in data center capacity and AI infrastructure have led to a substantial increase in capital expenditures. While these investments are intended to support future growth, they also carry risks. High capital expenditures could pressure margins and free cash flow in the short term. There's also a risk of overinvestment if the demand for AI and cloud services doesn't meet expectations, potentially leading to underutilized infrastructure and reduced returns on investment. Microsoft's substantial investments in AI infrastructure and services position the company to capitalize on the growing demand for AI-powered solutions. As AI becomes increasingly integrated into business processes and consumer applications, Microsoft's early mover advantage and deep integration of AI across its product portfolio could drive significant revenue growth. The company's partnership with OpenAI and the commercialization of generative AI technologies could open up new market opportunities and enhance existing products, potentially leading to sustained long-term growth. Microsoft's strong position in the enterprise software market provides a solid foundation for future growth. The company's Microsoft 365 suite, which includes popular productivity tools like Office, Teams, and SharePoint, is deeply entrenched in many organizations. This established presence gives Microsoft a significant advantage in cross-selling and upselling additional services, including cloud and AI offerings. The company's long-standing relationships with enterprise customers and its comprehensive ecosystem of products and services create high switching costs, potentially insulating Microsoft from competitive pressures. Microsoft Corporation continues to navigate a complex technological landscape, balancing significant investments in AI and cloud infrastructure with the need to maintain growth and profitability. While challenges exist, particularly in sustaining Azure's growth rate and managing high capital expenditures, the company's strong market position and diverse product portfolio provide a solid foundation for future success. As the AI and cloud markets evolve, Microsoft's ability to innovate and effectively monetize its investments will be crucial in determining its long-term performance. This analysis is based on information available up to November 5, 2024, and reflects the views and projections of various financial analysts and institutions as of that date. Gain an edge in your investment decisions with InvestingPro's in-depth analysis and exclusive insights on MSFT. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore MSFT's full potential at InvestingPro. Should you invest in MSFT right now? Consider this first: Investing.com's ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if MSFT is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level. To evaluate MSFT further, use InvestingPro's Fair Value tool for a comprehensive valuation based on various factors. You can also see if MSFT appears on our undervalued or overvalued stock lists. These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

Citi bullish on Amazon stock as GenAI surge and retail upgrades drive outlook By Investing.com

On Friday, Citi updated its outlook on Amazon.com, Inc. (NASDAQ:AMZN) stock, increasing the e-commerce giant's price target to $252 from $245 while maintaining a Buy rating. The adjustment follows Amazon's third-quarter 2024 earnings, which bolstered the analyst's belief in the company's potential to balance growth investments with significant margin improvements. The analyst highlighted Amazon's advancements in retail efficiency, which have reduced service costs, enabling quicker deliveries. This improvement, in turn, is believed to have enhanced conversion rates and expanded customer spending, especially as the company attracts more spending on lower average selling price (ASP) and essential products. Additionally, Amazon Web Services (AWS) is experiencing a surge in revenue from GenAI, with triple-digit year-over-year growth on a multi-billion annual recurring revenue (ARR) basis. The demand for new instances is expected to contribute to consistent growth and margins in the future. Despite close observation of Amazon's capital expenditures, which are increasingly linked to GenAI demand, and the recent delay of Project Kuiper to early 2025, the analyst anticipates greater overall growth and margin expansion for the company. The analyst's commentary underscores confidence in Amazon's strategic investments and its ability to generate higher growth. Amazon's stock performance is closely monitored by investors, with the company remaining a top pick in the internet sector. The updated price target reflects an optimism for Amazon's future financial performance, as the company continues to invest in technological advancements and infrastructure. In other recent news, Amazon.com Inc (NASDAQ:AMZN). has seen a flurry of adjustments to its stock price targets following robust third-quarter earnings. BofA Securities raised its Amazon target to $230, citing gains in AI and efficiency. The firm highlighted Amazon's recent margin improvement and the potential impact of the company's proprietary AI chip, Trainium2, on its valuation. DA Davidson, Cantor Fitzgerald, and Stifel also adjusted their price targets for Amazon, maintaining their positive ratings. DA Davidson confirmed a Buy rating with a steady target of $235, underscoring the reacceleration of growth in Amazon Web Services (AWS) and recovery in the retail segment. Cantor Fitzgerald raised its target to $240 from $210, following strong third-quarter results, particularly regarding earnings before interest and taxes (EBIT). Stifel increased its target to $245 from $224, highlighting a stronger than expected operating income. Amazon's third-quarter results revealed a revenue of $159 billion, marking an 11% year-over-year increase, and operating income surpassed consensus estimates. AWS, Amazon's cloud computing division, reported a year-over-year growth of 19%. Amazon's strategies in regionalization, inventory management, faster delivery times, and cost efficiencies appear to show clear and sustainable benefits. These are recent developments reflecting a positive outlook on Amazon's continued financial growth and operational efficiency. Amazon's strong market position and financial performance are further emphasized by recent InvestingPro data. The company boasts a substantial market capitalization of $1.96 trillion, reflecting its dominant status in the e-commerce and cloud computing sectors. Amazon's revenue growth remains robust, with a 12.32% increase over the last twelve months, aligning with Citi's positive outlook on the company's growth trajectory. InvestingPro Tips highlight Amazon's financial strength and market position. The company is noted as a "Prominent player in the Broadline Retail industry," which supports Citi's analysis of Amazon's retail efficiency improvements. Additionally, Amazon "Operates with a moderate level of debt," suggesting a balanced approach to financing its growth initiatives, including those in GenAI and AWS that Citi emphasized. For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide deeper insights into Amazon's financial health and market position.

BofA bullish on Amazon stock as AI investments and automation power margin gains By Investing.com

On Friday, BofA Securities updated its outlook on Amazon.com Inc (NASDAQ:AMZN), increasing the price target to $230 from $210 while maintaining a Buy rating on the stock. The adjustment follows Amazon's recent performance, which indicated an unexpected margin improvement, bolstering BofA's theory on retail margin efficiency. The analyst at BofA Securities highlighted Amazon's progress in artificial intelligence (AI) and its potential impact on the company's valuation. The introduction of Amazon's proprietary AI chip, Trainium2, is seen as a significant yet possibly underrecognized factor in the company's stock value. The analyst noted that Amazon is just beginning to implement robotics, with the opening of its first fully automated facility in Louisiana, which is expected to reduce labor dependence and initiate a new multiyear cycle of efficiency, potentially lowering costs compared to retail competitors. BofA's revised price objective of $230 is grounded on higher multiples in their Sum of the Parts (SOTP) analysis, with Amazon Web Services (AWS) valued at 9 times its estimated 2025 revenue, up from 8 times previously. Additionally, the revenue from Amazon's advertising business is now valued at 6 times, an increase from 5 times, reflecting the segment's improved margins. The report further details that Amazon's stock, at the after-hours price of $195, is trading at 27 times BofA's projected GAAP EPS of $7.19 for the year 2026. This new price target reflects the analyst's confidence in Amazon's ongoing investment in AI through AWS and the expected benefits from automation and robotics in its operations. In other recent news, Amazon.com, Inc. has been the focus of several analyst adjustments following its third-quarter earnings report. DA Davidson maintained a Buy rating on Amazon with a steady price target of $235, citing significant growth in Amazon Web Services (AWS) and a strong recovery in the retail segment. Similarly, Cantor Fitzgerald raised its price target to $240 from the previous $210, following Amazon's third-quarter results, which surpassed expectations, particularly with respect to its earnings before interest and taxes (EBIT). Stifel also increased its price target for Amazon to $245 up from the previous $224, following stronger than expected operating income. Truist Securities adjusted its outlook on Amazon, increasing the price target to $270 from the previous $265, while highlighting the company's strategic initiatives showing clear and sustainable benefits. These recent developments reflect a positive outlook on Amazon's continued financial growth and operational efficiency. The robust performance has led to several financial services firms, including Stifel, Truist Securities, UBS, Barclays (LON:BARC), and Wedbush, adjusting their price targets for Amazon upward. The company's EBIT for the third quarter was reported at $17.4 billion, surpassing their guidance of $15 billion. This positive trajectory has led to customers shopping more frequently and adding more low-priced items to their purchases. Amazon's recent performance and BofA's optimistic outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $1.96 trillion, reflecting its dominant position in the market. Amazon's revenue growth remains strong at 12.32% over the last twelve months, with quarterly growth of 10.12% in Q2 2024, indicating sustained expansion. InvestingPro Tips highlight Amazon's status as a "Prominent player in the Broadline Retail industry" and its ability to operate with "a moderate level of debt." These factors align with BofA's positive assessment of the company's retail margin efficiency and potential for cost reduction through automation. The company's P/E ratio of 43.58 and PEG ratio of 0.2 suggest that while Amazon trades at a high earnings multiple, it may still be undervalued relative to its near-term earnings growth potential. This perspective complements BofA's increased price target and the anticipated benefits from AI and robotics investments. For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Amazon, providing deeper insights into the company's financial health and market position.

Goldman sees Amazon stock potential as AI and e-commerce margins improve By Investing.com

On Friday, Goldman Sachs (NYSE:GS) adjusted its outlook on Amazon.com (NASDAQ:AMZN), increasing the e-commerce giant's price target to $240 from $230, while sustaining a Buy rating on the stock. This change follows Amazon's recent earnings report, which the analyst believes reinforces a positive long-term perspective on the company's financial health and market position. The analyst from Goldman Sachs highlighted several key factors contributing to Amazon's promising future. These include a robust growth in consolidated revenue and operating margin expansion over multiple years. Additionally, the analyst emphasized Amazon's ongoing investments in long-term growth initiatives that are expected to drive further success. Amazon's e-commerce margins are seen to benefit from increased volumes moving through a more efficient logistics network. Moreover, the company's advertising business is scaling up with high margins. Another significant growth driver identified is Amazon Web Services (AWS), which is anticipated to capitalize on the structural growth opportunity presented by the evolving needs of enterprise customers, especially with the introduction of General AI workloads. The analyst expressed an increased confidence in Amazon's key platform drivers, both in terms of revenue growth and margin trajectory, after reviewing the earnings report. The raised price target reflects an optimistic view of the company's operational estimates moving forward. Goldman Sachs' endorsement of Amazon's stock comes at a time when the company continues to expand its footprint in various sectors and solidify its presence as a leader in online retail and cloud computing services. The reiterated Buy rating and the adjusted price target suggest that the firm sees Amazon as a strong investment with the potential for significant returns in the next 12 months. In other recent news, Apple (NASDAQ:AAPL) and Amazon have maintained their market positions following their respective quarterly earnings reports. Apple's sales of the iPhone 16 have outpaced those of the iPhone 15, demonstrating a positive customer response to the latest model. On the other hand, Amazon's third-quarter profits and sales exceeded Wall Street analysts' expectations, resulting in a rise in its Frankfurt-listed shares. Among other recent developments, Amazon is bolstering its selection of everyday essentials to compete with low-cost international rivals such as Temu and Shein. This strategy has led to customers shopping more frequently and adding more low-priced items to their purchases, contributing to larger order values and increased overall spending on Amazon. In response to the same market dynamics, Chinese online retailer Temu is considering joining a European anti-counterfeit group to fight against fake goods online. This move comes as the European Union intensifies its scrutiny on Temu's product controls within its marketplace. Amazon's third-quarter revenue figures exceeded market expectations, primarily driven by significant growth in its cloud services sector. The company recorded a revenue of $158.9 billion for the quarter ending in September, surpassing the average analyst projection. Finally, Amazon has also been working to counteract the pressure on its average selling prices and compete with low-cost rivals by boosting sales of everyday essentials. This strategy has resulted in customers shopping more frequently and adding more low-priced items to their purchases. Goldman Sachs' optimistic outlook on Amazon is further supported by recent data from InvestingPro. As of the last twelve months ending Q2 2024, Amazon's revenue stood at an impressive $604.33 billion, with a solid revenue growth of 12.32%. This aligns with the analyst's observation of robust consolidated revenue growth. The company's operational efficiency is evident in its adjusted operating income of $54.38 billion and an operating income margin of 9.0% for the same period. This data reinforces Goldman Sachs' expectation of margin expansion over the coming years. InvestingPro Tips highlight that Amazon is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of just 0.2. This suggests that the stock may be undervalued considering its growth prospects, potentially supporting Goldman Sachs' increased price target. Another InvestingPro Tip notes that analysts predict the company will be profitable this year, which aligns with the positive long-term perspective mentioned in the article. For investors seeking more insights, InvestingPro offers additional tips that could provide a deeper understanding of Amazon's financial position and future potential.

Amazon Analysts See Growth Ahead With AWS In 'Early Innings Of A Big AI Cycle,' Advertising Segment Fast-Growing 'Hidden Asset' - Amazon.com (NASDAQ:AMZN)

The company's AWS segment sees the most attention, but advertising is seeing strong commentary as a future growth asset. Amazon.com Inc AMZN analysts see strength in AWS, retail and advertising after the company's third-quarter results. The Amazon Analysts: Bank of America analyst Justin Post reiterated a Buy rating on Amazon and raised the price target from $210 to $230. Wedbush analyst Scott Devitt maintained an Outperform rating and raised the price target from $225 to $250. Goldman Sachs analyst Eric Sheridan maintained a Buy rating and raised the price target from $230 to $240. Needham analyst Laura Martin maintained a Buy rating with a $210 price target. RBC Capital Markets analyst Brad Erickson maintained an Outperform rating and raised the price target from $215 to $225. BMO Capital Markets analyst Brian Pitz reiterated an Outperform rating and raised the price target from $230 to $236. Truist analyst Youssef Squali maintained a Buy rating and raised the price target from $265 to $270. Telsey analyst Joseph Feldman maintained an Outperform rating and raised the price target from $215 to $235. Benchmark analyst Daniel Kurnos maintained a Buy rating and raised the price target from $200 to $215. Scotiabank analyst Nat Schindler had a Sector Perform rating and raised the price target from $245 to $246. JMP Securities analyst Nicholas Jones maintained a Market Outperform rating and raised the price target from $265 to $285. Oppenheimer analyst Jason Helfstein maintained an Outperform rating and raised the price target from $220 to $230. Piper Sandler analyst Tomas Champion reiterated an Overweight rating and raised the price target from $215 to $225. Analysts on Amazon AWS: Growth for AWS was 19% year-over-year, which could be stable compared to past quarters, analyst estimates and peers like Google, Bank of America's Post said in a new investor note. The analyst said AWS could still be "in the early innings of a big AI cycle." "We think AWS' $1.2bn in q/q revenue dollar growth will compare well to competitors," Post said. Wedbush's Devitt highlighted AWS's AI business being a multi-billion dollar run rate segment and growing triple-digits year-over-year in a new investor note. "We are encouraged by commentary in the quarter indicating healthy cloud trends, with an ongoing reacceleration in AWS growth for the fourth consecutive quarter bolstered by rising demand for new AI offerings," Devitt said. Analysts on North America, Amazon Prime: The third quarter saw Prime members grow thanks to the Prime Day Event held in July, Post said. The analyst said Amazon is seeing strength in its North American retail segment as it improves product offerings, especially on lower-cost products. "With strength in categories like everyday essentials, Amazon is seeing bigger baskets," Post added. Amazon's efforts on better product selection and lower priced items could be helping the company gain "profitable market share," Telsey's Feldman said in a new investor note. "The healthy Retail results reflect gains from an expanded product assortment, with a greater focus on every day and value items," Feldman said. The analyst said Amazon's focus on grocery and pharmacy could be helping and continue to help with the retail segment. "Amazon should continue to gain market share by leveraging its sticky Prime member base." Analysts on International Segment: Revenue of $35.9 billion and revenue growth of 12% year-over-year made the international segment "particularly strong" in the third quarter, Post said. The analyst said strength in established countries like Germany and the U.K. are seeing positive trends. Amazon aiming for the same margins in international markets as its North America segment was "a positive new disclosure," Post added. Analysts on Advertising: Amazon's advertising segment could be the company's "fastest-growing hidden asset," Needham's Martin said in a new investor note. Advertising revenue was $14.3 billion in the third quarter, up 19% year-over-year. "AMZN advertising is one of the fastest growing revenue and value creation engines in the AMZN portfolio, we believe," Martin said. The analyst estimates operating profit margins of 40% for Amazon advertising in the third quarter. BMO Capital Market's Pitz calls the advertising growth in the third quarter attractive and sees upside in future quarters thanks to Amazon Prime Video and sports content. "The recent launch of AI Bidding Tools increases the likelihood of continued adoption," Pitz said. The analyst said Amazon Ads could approach 10% of gross merchandise volume over time. The Prime Video ad tier entered a first advertising season in October, which makes the advertising sector one to watch going forward, Truist's Squali said. "We believe the Prime Video Ad Tier can represent an MSD% of Amazon's total ad revenue annually in FY25," Squali said. The analyst said Amazon should see "above market growth" for its advertising business going forward. AMZN Price Action: Amazon stock is up 6.07% to $197.79 on Friday versus a 52-week trading range of $136.47 to $201.20. Amazon stock is up 33% year-to-date in 2024. Photo: Shutterstock Market News and Data brought to you by Benzinga APIs

Goldman Sachs analyst updates Amazon stock price target after earnings

Amazon shares moved firmly higher in early Friday trading, adding upward momentum to the three major stock benchmarks, after the tech and retail giant's third quarter earnings triggered a host of price target changes from top analysts on Wall Street. Amazon (AMZN) , which along with its megacap tech peers is spending billions on new AI technologies and infrastructure, is also seeing expansion in its retail and advertising businesses heading into the final three months of the year, while its powerful Web Services division continues to impress in an increasingly competitive market. That's allowing investors to feel more confident that its massive capital spending plans, which include a $75 billion outlay this year and even more projects in 2025, can be at least partly offset by improving cash from and profit margins until the AI bets start to monetize. "We've proven over time that we can drive enough operating income and free cash flow to make this very successful return on invested capital business," Amazon CEO Andy Jassy told investors on a conference call late Thursday. "And we expect the same thing will happen here with generative AI. It is a really unusually large, maybe once-in-a-lifetime type of opportunity," he added. "And I think our customers, the business, and our shareholders will feel good about this long term that we're aggressively pursuing it." Amazon posted overall third quarter revenues of $158.9 billion, an 11% increase from the same period last year that narrowly topped Street forecasts and included 7% gain in retail sales and an a 14% improvement in ad sales. The group's operating margin improved to 11%, nearly 2 percentage points ahead of the consensus Wall Street forecast, thanks in part to shipping and logistic efficiencies and the group's ongoing cost-cuts. Margin improvement Amazon Web Services (AWS), meanwhile, saw revenues rise 19% to $27.5 billion, capping the best quarterly gain in nearly two years, with an operating margin of 38.1%, nearly 5 percent points head of analysts' estimates. Goldman Sachs analyst Eric Sheridan, who lifted his Amazon price target by $10 to $240 per share following last night's update, said the results gave the bank "increased confidence in our medium/long-term thesis around Amazon's platform drivers (in both revenue compounding and margin trajectory)." Sheridan said Amazon's e-commerce margins were getting a boost from a more efficient logistics network, while scale in the ad business was also allowing for improved profitability. Related: Analysts revisit Microsoft stock price targets after Q1 earnings "AWS benefits from a structural growth opportunity, driven by enterprise customers' evolving needs and Gen AI workload tailwinds," he added. "Looking long-term, we reiterate our view that Amazon will compound a mix of solid consolidated revenue growth and operating margin expansion over multiple years while also investing in key long-term growth initiatives," Sheridan and his team wrote. Looking into the final months of the year, a key period for its retail and ad operations, Amazon said it sees revenues in the region of $185 billion, just shy of the mid-point LSEG forecast of around $186.1 billion, with more margin expansion and higher operating income of between $16 billion and $20 billion. AI demand trends JMP Securities analyst Nicholas Jones, who lifted his price target by $20 to $285 per share following last night's update, calling it "the stock to own within e-commerce given its wide selection of non-discretionary items, its large and growing advertising business, and AWS's exposure to AI." "Amazon is seeing favorable trends in everyday essentials, leading customers to build bigger baskets and shop more frequently, though management noted customers remain cost conscious," Jones said. "Demand for AI is continuing to drive strong AWS trends, with AI representing a multi-billion-dollar annual revenue run-rate and growing in the triple digits." Related: Analysts overhaul Alphabet stock price targets as Google parent soars The AWS trends, tied to the surge in global AI investment spending, suggest the unit's AI business is a "multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than three times faster at this stage of its evolution as AWS itself grew," Jassy told investors late Thursday. D.A. Davidson analyst Gil Luria cited this improvement, as well as AWS' gains against hyperscaler peers such as Microsoft Azure (MSFT) and Google Cloud (GOOGL) , as driving a reacceleration for the group. More Tech Stocks: Over the past few quarters, Amazon has taken several steps to reach product and feature parity with its hyperscaler peers in AI, and particularly Azure, where Amazon now has a broad set of product offerings for GenAI specific workloads," said Luria. "Amazon is also seeing strong adoption of their AI features including Amazon Q, Bedrock, and SageMaker, and we expect at the upcoming 're:Invent' conference in December for AWS to unveil innovative products and features to up the competition with the other hyperscalers," he added. Amazon shares were marked 6.5% higher in premarket trading to indicate an opening bell price of $198.29 each, a move that would extend the stock's 2024 gain to around 30.2% and lift its market value past $2 trillion. Related: Veteran fund manager sees world of pain coming for stocks

Amazon Stock Climbs as Analysts Raise Price Targets on Soaring AI Growth

Amazon (AMZN) shares jumped Friday as multiple analysts raised their price targets for the e-commerce giant following third-quarter results that topped expectations. Wedbush upped its price target to $250 from $225, pointing to Amazon's surging artificial intelligence (AI) business. On the company's earnings call, Chief Executive Officer (CEO) Andy Jassy said Amazon's AI business is growing three times faster than Amazon Web Services (AWS), its cloud computing division, did at the same stage in its development. Cloud revenue jumped 19% year-over-year to more than $27 billion amid surging demand for AI. In terms of investment, Amazon said it expects to spend $75 billion in capital expenditures this year, the majority of which will go toward technology infrastructure to support AI demand, according to a transcript of the earnings call provided by AlphaSense. JPMorgan analysts are "comfortable" with the increase in expenditures given Amazon's "very clear path to AI monetization through AWS," the firm said, raising its price target to $250 from $230. Shares of Amazon rose 7% to $199.68 in late-morning trading Friday and are up more than 31% year-to-date.