Wall Street's outlook for Amazon's stock over the next 12 months is bullish, leading to an upgrade in evaluation.
Amazon, a leading technology company (NASDAQ: AMZN), is further raising expectations on Wall Street with solid performance and future growth strategies. The current stock price is $229.44, recording a over 53% increase year-to-date, and surpassed market expectations for the 7th consecutive time in the 2024 Q3 earnings report.
Andrew Quail of JMP Securities emphasized the company's advertising business and the AWS deployment in AI, keeping the target price at $285. On the other hand, Brent Thill of Jefferies raised the target to $275, focusing on the profitability of the cloud business and the revenue potential of AI.
The next earnings report is scheduled for February 6, 2024, and it is a phase where cautious attention should be paid to the stock price trends.
Andrew Quail of JMP Securities emphasized the company's advertising business and the AWS deployment in AI, keeping the target price at $285. On the other hand, Brent Thill of Jefferies raised the target to $275, focusing on the profitability of the cloud business and the revenue potential of AI.
The next earnings report is scheduled for February 6, 2024, and it is a phase where cautious attention should be paid to the stock price trends.
AI strategy and growth potential of cloud services are supporting Amazon's stock price.
One of the pillars supporting Amazon's future is the deployment of AI technology and cloud services, including AWS (Amazon Web Services). AWS boasts over 50% market share in the cloud market, surpassing its competitors by a wide margin. With growing expectations that the utilization of AI technology will significantly contribute to the future growth of AWS, Amazon's announcement of "Amazon Nova" has become emblematic. These AI models are garnering attention as corporate solutions, enhancing competitiveness in the rapidly growing AI market.
As Brent Thill points out, AWS is forecasting an operating profit range for the fourth quarter of $16 to $20 billion, alleviating investors' concerns. However, there is also a sense of disappointment regarding AWS's growth pace, and the movements of competitors Microsoft and Google could pose a threat. If AWS's growth slows down, pressure on the stock price will be unavoidable.
On the other hand, new AI-related technologies contribute to the streamlining of advertising operations and E-Commerce management. Amazon, which has successfully optimized ad delivery using AI, continues to improve profit margins while diversifying revenue sources. Strategic investments in the AI field are the foundation for steadily producing profits, but the extent to which these effects will be reflected numerically in future performance reports is of interest.
As Brent Thill points out, AWS is forecasting an operating profit range for the fourth quarter of $16 to $20 billion, alleviating investors' concerns. However, there is also a sense of disappointment regarding AWS's growth pace, and the movements of competitors Microsoft and Google could pose a threat. If AWS's growth slows down, pressure on the stock price will be unavoidable.
On the other hand, new AI-related technologies contribute to the streamlining of advertising operations and E-Commerce management. Amazon, which has successfully optimized ad delivery using AI, continues to improve profit margins while diversifying revenue sources. Strategic investments in the AI field are the foundation for steadily producing profits, but the extent to which these effects will be reflected numerically in future performance reports is of interest.
The gap between analysts' target stock prices and reality
The reason behind JMP Securities and Jefferies analysts raising their target stock price for Amazon lies in the solid performance and growth potential of the business. Andrew Kweil focused on operating profit guidance, profit margin growth, and evaluated the variety of discretionary non-consumer goods as continuing to attract consumer needs. In the maturing E-Commerce market, Amazon's strategy of focusing on everyday consumption shows strong resilience to economic fluctuations.
On the other hand, Brent Thill set a bullish target price of $275, citing the potential of AI revenue in the cloud business as the basis. However, it is important to note that he acknowledges the slowing growth of AWS. While maintaining market share, if AWS's revenue acceleration lags behind, its effect will likely be reflected in the stock price.
The apparent increase in target stock price from the current stock price is approximately 20%, with investor sentiment having a significant impact. While the signing of defense contracts and the announcement of new technologies are positively received, amid already high stock prices, adjustment phases are also conceivable. Market sentiment overall being bullish towards Amazon is certain, but a stance that does not overlook short-term price fluctuations is necessary.
On the other hand, Brent Thill set a bullish target price of $275, citing the potential of AI revenue in the cloud business as the basis. However, it is important to note that he acknowledges the slowing growth of AWS. While maintaining market share, if AWS's revenue acceleration lags behind, its effect will likely be reflected in the stock price.
The apparent increase in target stock price from the current stock price is approximately 20%, with investor sentiment having a significant impact. While the signing of defense contracts and the announcement of new technologies are positively received, amid already high stock prices, adjustment phases are also conceivable. Market sentiment overall being bullish towards Amazon is certain, but a stance that does not overlook short-term price fluctuations is necessary.
Expectations for the next earnings report and investor perspectives
Amazon's next earnings report is scheduled for February 6, 2024, and the impact this announcement will have on the stock price is immeasurable. Due to the recent performance consistently exceeding market forecasts, investor expectations are even higher. Particularly, if there is continuous improvement in operating profit and profit margins, growth in advertising operations, and an acceleration in AWS revenue, there is a potential for the stock price to enter an upward trend once again.
However, considering the significant increase in stock price over the past 30 days, the possibility of a short-term decline cannot be ignored. The target price indicated by JMP Securities and Jefferies analysts is based on a medium to long-term perspective, and investors need to carefully identify more attractive entry points.
Furthermore, as Amazon continues to advance its strategic focus on non-discretionary consumer goods and AI-related initiatives, the strengthening of its business portfolio will also be a key focus in terms of performance implications. It is essential to monitor the next earnings report closely to see if Amazon can sustain its growth momentum and provide shareholders with new confidence.
However, considering the significant increase in stock price over the past 30 days, the possibility of a short-term decline cannot be ignored. The target price indicated by JMP Securities and Jefferies analysts is based on a medium to long-term perspective, and investors need to carefully identify more attractive entry points.
Furthermore, as Amazon continues to advance its strategic focus on non-discretionary consumer goods and AI-related initiatives, the strengthening of its business portfolio will also be a key focus in terms of performance implications. It is essential to monitor the next earnings report closely to see if Amazon can sustain its growth momentum and provide shareholders with new confidence.
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