Amazon Stock Poised for Growth: Analysts Bullish Ahead of Q2 Earnings

Amazon Analysts Predict Upside For Stock Into Q2 Earnings: 'Prior Headwinds ... Turn Into Tailwinds' - Amazon.com (NASDAQ:AMZN)

Analysts from Benchmark and Goldman Sachs reiterate Amazon with a Buy rating ahead of earnings. Multiple analysts have weighed in on Amazon.com Inc AMZN stock this week as the e-commerce giant's annual Prime Day event gets rolling. The consensus view is that Amazon is positioned for further upside heading into earnings. AWS Growth: Wolfe Research analyst Shweta Khajuria initiated coverage on Amazon Tuesday with an Outperform rating and $250 price target. Khajuria's bull case for Amazon is centered around Amazon Web Services (AWS) growth acceleration, margin expansion and retail share gains. "In terms of near-to-mid-term fundamentals, we like the 2024 setup for Amazon," the analyst said in a new note. "We expect accelerating Y/Y growth at AWS this year, ongoing Retail margin expansion, share gains in eCommerce driven by faster delivery speeds and mix-shift to everyday essentials, and new growth catalysts in the form of Prime Video, Grocery, and Amazon Logistics -- to name a few." The Wolfe Research analyst said AWS growth is poised to trend higher driven by rising consumption, generative AI product adoption and secular tailwinds. Khajuria also highlighted meaningful margin expansion potential driven by AWS growth, extended server life and operating efficiency. See Also: Amazon Faces FTC Inquiry Over AI Talent Acquisition From Adept Prime Day Is Here: On the retail side of the business, the analyst expects Amazon to benefit as consumers consolidate spending toward the largest retailers and the company continues to take share by offering faster delivery times. Amazon's 2024 Prime Day is taking place on Tuesday and Wednesday. Prime members have access to millions of exclusive deals spanning more than 35 categories including electronics, kitchen, beauty and apparel. In a note to clients on Tuesday, Benchmark analyst Daniel Kurnos predicted this year's Prime Day event will be Amazon's biggest ever. Amazon said Prime members bought more than 375 million items worldwide during the two-day event last year. Still, Kurnos warned that some outlets are expecting Amazon's e-commerce share during Prime Day to shrink as more and more competitors run deals to try to keep up with Amazon during this period. The Prime Day numbers will help boost Amazon's third-quarter results, but second-quarter earnings are only about two weeks away. Check This Out: Amazon Set To Top Last Year's Prime Day Results Due To Early Deals, Analysts Say Amazon Earnings On Deck: The Benchmark analyst reiterated Amazon with a Buy rating and maintained a price target of $200 ahead of earnings. As Amazon shares have climbed higher this year, consensus estimates have gone up too, Kurnos said. "We suspect that the underlying initiatives and excitement around things like AI and better cost controls are still likely to carry the day but think it is fair to wonder if there is less margin for error in the back half of the year," the analyst said. Finally, Goldman Sachs analyst Eric Sheridan released a new note on Amazon this week previewing second-quarter earnings. The analyst raised his operating income estimate citing margin optimism, which now puts the estimate about 8% above consensus, he said. Sheridan expects three main investor debates to be settled when Amazon reports earnings, including the overall health of the consumer, the ability for the company to continue to drive margin upside and the trajectory of AWS revenue growth. The Goldman analyst believes these are key to driving incremental share price performance. "We continue to expect reacceleration through 2024 as prior headwinds around optimization and workload migration turn into tailwinds and AI workloads are a rising tailwind," Sheridan said. Goldman reiterated its Buy rating on Amazon and raised its price target from $225 to $250. AMZN Price Action: Amazon shares were up 0.12% at $192.94 at the time of publication Tuesday, according to Benzinga Pro. Read Next: Q2 Earnings Preview: Why Amazon, Uber, Google Are JPMorgan's Top Picks Flat Retail Sales Report Shows 'A More Discerning Consumer' Keeps Spending, Economists Say Photo: courtesy of Amazon. Market News and Data brought to you by Benzinga APIs

Amazon Bull Calls Grow as Wolfe Sees Big Upside for Stock

The analysts said they're watching for margin expansion, Amazon Web Services growth, artificial intelligence initiatives, and spending updates, and highlighted Amazon's leading position in retail, digital advertising, and cloud computing. Amazon's (AMZN) stock has a new bull, with Wolfe Research analysts calling for a roughly 30% rise in the shares, driven by the company's leadership position and exposure to growth opportunities. The analysts gave Amazon an "outperform" rating and a price target of $250, above Visible Alpha's consensus target near $225. The shares edged higher as of 1:45 p.m. ET Tuesday, rising 0.3% from Monday's close of $192.72. Amazon's stock has gained more than 25% year-to-date, outpacing the S&P 500 index alongside some of its Magnificent 7 peers. Wolfe's analysts said eyes are on margin expansion, Amazon Web Services (AWS) growth, artificial intelligence (AI), and capital expenditures (CapEx). They highlighted the company's leadership position and differentiated value proposition in three market opportunities of $1 trillion or more: retail, digital advertising, and cloud computing. They also said that Project Kuiper, Amazon's satellite broadband network, as well as Amazon Business, its corporate membership option, represent growth opportunities.

Amazon stock target raised at Goldman on higher profit estimates By Investing.com

Goldman Sachs analysts have raised their outlook for Amazon (NASDAQ:AMZN) stock, citing an anticipated increase in operating income driven by stronger margins. In their recent note, the analysts highlighted three key factors likely to influence Amazon's upcoming Q2 2024 operating results: the overall health of the consumer market, Amazon's ability to enhance its operating income margins, and the growth trajectory of AWS revenue. Goldman Sachs said Amazon's eCommerce business has remained robust in Q2, despite some weaknesses in the UK and Germany. The analysts see significant potential for Amazon to outperform in 2025 and beyond, primarily due to higher retail margins and a stronger contribution from advertising. They also maintain a positive long-term outlook on international margins and expect AWS profitability to remain strong. "We continue to expect reacceleration through 2024 as prior headwinds around optimization and workload migration turn into tailwinds and AI workloads are a rising tailwind," wrote Goldman Sachs. The investment bank increased their 12-month price target for Amazon from $225 to $250, reiterating their Buy rating. This updated price target implies that Amazon will trade at 30 times their revised $8.29 2026 GAAP EPS estimate, which is 12% above the Street estimate of $7.42. The Goldman Sachs report notes that Amazon's recent stock performance, which has outperformed the S&P and Nasdaq over the past year, has been driven by higher profit estimates despite a period of multiple compression acting as a headwind to equity returns. In their margin analysis, the bank sees room for retail margins to expand due to operating leverage on fixed retail assets, progress in lowering cost-to-serve per unit, and a more moderate rate of inflation for key input costs. Additionally, the growing scale of Amazon's advertising efforts is expected to further boost operating income margins. The analysts also view their AWS margin projections as conservative, suggesting potential upside surprises if AWS revenue growth exceeds their forecast.