Amazon Stock Analysis: What 5 Analysts Are Saying After Earnings

Cantor Fitzgerald analysts reiterated an Overweight rating on Amazon.com (NASDAQ:AMZN), maintaining a price target of $270 on the stock. The outlook highlights Amazon’s robust positioning among mega-cap names, with potential upside in key metrics for both the fourth quarter of 2024 and the first quarter of 2025.

Amazon Web Services (AWS) is expected to play a pivotal role in the company’s performance, benefiting from accelerated growth in inference workloads driven by advancements in the large language model (LLM) AI layer. With a competitive infrastructure stack and deep customer relationships, AWS is poised to capture a significant share of this growing market, bolstering its growth trajectory in the cloud computing space.

In the retail segment, Amazon is set to capitalize on fixed-cost leverage, which is anticipated to contribute to margin expansion throughout 2025. According to the analysts, this improvement is likely to persist even as the company faces incremental expenses related to the Kuiper satellite initiative, showcasing the resilience of its core operations. Despite investor sentiment already reflecting a favorable near-term outlook, Amazon offers multiple growth catalysts in the coming year.

On November 19, 2024, Daniel P. Huttenlocher, a director at Amazon (NASDAQ:AMZN), sold 1,237 shares of the company's Common Stock at $199.06 per share. This transaction leaves him with 24,912 shares. Amazon, a global e-commerce and technology leader, faces competition from companies like Walmart and Alibaba. Despite challenges, Amazon remains a dominant force in the market.

Amazon is currently facing hurdles in enhancing Alexa with advanced AI features. The company has experienced delays in launching the new AI-powered version due to integration complexities with partners like Uber and Ticketmaster. These challenges highlight the intricate nature of developing cutting-edge technology, which is crucial for maintaining Amazon's competitive edge.

Despite these challenges, Amazon has announced it will not increase its merchant fulfillment and referral fees in 2025. As highlighted by PYMNTS, this decision comes despite inflation and significant investments in employee pay and benefits. Amazon attributes this to cost reductions achieved through innovation, efficiency, and defect reduction, benefiting sellers on its platform.

In addition to its e-commerce operations, Amazon is involved in innovative projects like SENSICALMATCH.AI™, a collaboration with Common Sense Networks and Deloitte. This platform, powered by Amazon Web Services (AWS), aims to enhance safe advertising for children. This initiative underscores Amazon's commitment to leveraging technology for safety and innovation.

Amazon's stock price is currently $204.61, reflecting a 1.44% increase. The stock has traded between $198.80 and $205.30 today, with a market capitalization of approximately $2.15 trillion. Over the past year, the stock has seen a high of $215.90 and a low of $141.50, with a trading volume of 30,846,395 shares on the NASDAQ.

Amazon.com (NASDAQ:AMZN) reported third-quarter earnings that exceeded analyst expectations, pushing its stock up over 7% intra-day today. The tech giant's performance was boosted by growth in artificial intelligence, particularly within its cloud division.

Amazon posted adjusted earnings per share of $1.43, beating the forecasted $1.14, and reported revenue of $158.9 billion, surpassing estimates of $157.25 billion and marking an 11% year-over-year increase.

CEO Andy Jassy highlighted "once-in-a-lifetime" opportunities emerging from generative AI, which has spurred an uptick in cloud demand as businesses ramp up investment in the necessary infrastructure. Amazon Web Services (AWS) saw a substantial lift, with sales jumping 19% to $27.5 billion. Jassy noted that AI-driven operations within AWS were experiencing "triple-digit" growth.

The surge in AI demand, however, has led Amazon to significantly boost capital expenditures on data centers and networking, with $75 billion planned for this year and even higher spending expected in 2024.

Amazon’s AI-powered shopping assistant, Rufus, expanded to additional markets, while new AI tools were rolled out for sellers and advertisers, enhancing the company’s offerings as it heads into the holiday season. North American sales rose 9% to $95.5 billion, with international sales up 12% to $35.9 billion. Amazon's operating margin reached a record 11%, with AWS margins hitting an all-time high of 38%.

For the fourth quarter, Amazon projected revenue between $181.5 billion and $188.5 billion, just below the midpoint of Wall Street analysts' $186.36 billion estimate. The company forecasted Q4 operating income between $16.0 billion and $20.0 billion.

Amazon.com (NASDAQ:AMZN) shares fell nearly 3% intra-day today after Wells Fargo analysts downgraded the company to Equal Weight from Overweight, lowering their price target to $183 from $225. The analysts pointed to several near-term pressures that could impact Amazon's operating income, including continued investment in Project Kuiper, anticipated challenges in Fulfillment by Amazon (FBA) fees, and a slowdown in advertising operating income growth.

The analysts adjusted Amazon’s operating income estimates downward by $5.4 billion, $4.5 billion, and $5.5 billion for 2025, 2026, and 2027, respectively, reflecting reductions of 7%, 5%, and 5%. They noted that while the market is bracing for fourth-quarter margin impacts, first-half 2025 margin expansion may also be limited. The analysts remain cautious until visibility around Amazon’s margin expansion improves.

They highlighted growing competition from Walmart, whose expanding fulfillment services and competitive pricing in third-party merchant logistics could limit Amazon's FBA fee growth. Wells Fargo estimates Amazon’s FBA fee inflation may see a decline of around $2 billion annually if inflation remains closer to 2024 levels. Additionally, the analysts see merchant advertising growth slowing as it has already reached 6% of gross merchandise volume (GMV) in 2024, up from 3.7% in 2020, with expectations for more modest growth going forward.

Amazon’s ad revenue may also face cost pressures from high-profile content rights, including anticipated NBA-related expenses in 2025.

JMP Securities analysts raised their price target for Amazon.com (NASDAQ:AMZN) to $265, up from $245, while maintaining a Market Outperform rating on the stock.

The analysts highlighted Amazon's robust advertising capabilities, driven by its vertically integrated, full-stack advertising platform that spans from upper to lower funnel solutions. They emphasized that Amazon's Prime membership provides unmatched data and attribution capabilities, giving it a competitive edge in the advertising space.

JMP also noted that Amazon's connected TV (CTV) advertising has lower ad loads and costs compared to competitors. The analysts project that Prime Video will generate nearly $2 billion in revenue from advertising in 2024, with potential for further growth as ad load and cost-per-thousand impressions (CPMs) increase alongside viewing hours, bolstered by live sports licensing agreements.

Additionally, the analysts believe Amazon will eventually extend its ad-tech and data capabilities to the broader web, creating new revenue opportunities within its Advertising Services business.

Amazon (NASDAQ:AMZN) reported strong second-quarter earnings that exceeded analyst expectations, but the company's stock dropped 8% intra-day today due to weaker-than-anticipated guidance for the upcoming third quarter.

For Q2, Amazon posted adjusted earnings per share of $1.26, significantly beating the analyst estimate of $1.03. Revenue for the quarter was $148.0 billion, slightly below the Street estimate of $148.68 billion but reflecting a 10% year-over-year increase from $134.4 billion in the same period last year.

However, Amazon's third-quarter revenue guidance of $154-158.5 billion fell short of analyst expectations of $158.2 billion, contributing to the stock's decline.

Amazon President and CEO Andy Jassy emphasized the company's progress, particularly noting the continued growth in Amazon Web Services (AWS). AWS reported sales of $26.3 billion, up 19% year-over-year, showcasing its strength within the company's portfolio. The North America segment saw a 9% increase in revenue to $90.0 billion, while the International segment grew by 7% to $31.7 billion, or 10% when excluding foreign exchange impacts.

Amazon's operating income more than doubled to $14.7 billion, compared to $7.7 billion in the second quarter of 2023, highlighting significant improvements in profitability.