Amazon's stock (AMZN) is soaring following a strong Q3 earnings report that has pushed AMZN to $251 in the pre-market, up at a new high. The surge, fueled by robust performance in Amazon Web Services (AWS) and overwhelmingly positive analyst reactions, is pushing the stock beyond previous resistance.
The catalyst for the surge was Amazon's impressive third-quarter 2025 earnings report. The company reported a 20% increase in AWS revenue, marking the fastest growth rate in nearly three years, driven primarily by the burgeoning demand for artificial intelligence (AI) development.
Overall revenue for the quarter reached $180.2 billion, a 13% increase from the same period last year, surpassing analysts' expectations. Furthermore, Amazon's forecast for fourth-quarter sales, projected to be between $206 billion and $213 billion, also exceeded the street's projections, further fueling bullish sentiment.
Analyst Upgrades Flood In
The strong earnings report triggered a wave of analyst upgrades, with several firms revising their price targets for Amazon's stock upward.
Wells Fargo raised its price target to $292 from $280, citing the acceleration in AWS growth and solid retail performance.
Citi increased its price target even more aggressively, to $320 from $270, emphasizing the potential for continued acceleration in AWS revenue growth and reaffirming Amazon as its top internet pick.
Canaccord, Citizens JMP, and Barclays also raised their price targets, all citing AWS's impressive growth and Amazon's strong performance across its various business segments. The average price target is now around $300.
Price Targets
Bull Case:
- AWS Dominance: Continued strong growth in AWS, driven by AI demand, will fuel revenue and profitability.
- E-commerce Rebound: Improvements in the e-commerce segment, driven by cost-cutting measures and increased efficiency, will boost overall performance.
- AI Leadership: Amazon's investments in AI and custom silicon will position it as a leader in the rapidly growing AI market.
- Capital Expenditure: Massive investment in infrastructure will pay off with increased future revenue.
Bear Case:
- E-commerce Weakness: Global trade uncertainties and inflationary pressures could continue to weigh on the e-commerce segment.
- AWS Competition: Increased competition from other cloud providers, such as Microsoft and Google, could erode AWS's market share.
- Regulatory Scrutiny: Potential regulatory scrutiny and antitrust concerns could limit Amazon's growth and profitability.
- Capital Expenditure: Capital expenditure of over $125 billion in 2025 may not yield the expected returns.
While the long-term outlook for Amazon remains positive, investors should be prepared for potential volatility in the near term. The stock's trajectory will depend on a variety of factors, including the overall health of the global economy, the competitive landscape in the cloud computing and e-commerce markets, and Amazon's ability to execute its strategic initiatives effectively.
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