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Analyst Sees 30% Upside In Amazon (NASDAQ:AMZN) – Street Remains Bullish

Analyst Team trader
Updated 17 Apr 2024

As earnings season gets firmly into swing, we take a look at one of the Magnificent 7 two weeks out from its' own earnings date (April 30th). A recent letter to shareholders from the Amazon CEO has set tongues wagging, and triggered some analyst upgrades in advance of earnings.

The high target price on Amazon stock has been bumped from the previous mark of $230, to a new high of $235 (more on that in a moment). The real question is, what is it that has this analyst looking at close to 30% upside in AMZN stock, after an already pretty incredible 12 month performance, up 77.33%.

One firm putting trust in Amazon is Baird, coming hot on the heels of Amazon CEO Andy Jassy’s recent shareholder letter, which offered a rigorous and optimistic outlook for the company’s future. Baird's analysts have cited several potential growth drivers for the company, notably, the continued expansion of its rapid delivery services, the accelerated growth of Amazon Web Services (AWS), and initiatives aimed at boosting profit margins across its various business segments. Bair keep an ‘outperform' rating on the stock, and raise price target to $205.

At the core of Baird's endorsement is a recognition of Amazon's sustained operational efficiency, its strategic exploration of new growth opportunities, and its capability to leverage a commanding competitive edge in the market. The company's emphasis on foundational business components such as retail, logistics, and AWS, complemented by strides into burgeoning sectors like generative artificial intelligence (AI), healthcare, and internet accessibility, illustrates a broad-spectrum strategy.

Furthermore, Amazon is anticipated to implement measures to reduce the cost of retail deliveries, which could result in the expansion of retail margins. In addition to enhancing efficiencies in their traditional offerings, the company is strategically positing more affordable products to widen its retail market presence. Temu and Shein are's largest competitors and all three stock similar products. It is imperative that Amazon ups it's game to continue being the consumer behemoth it is today.

Concerning AWS, Amazon Web Services, the division that has continually centered itself on cost optimisation, there is a nascent shift towards a more aggressive growth-oriented posture. Opportunities, especially those associated with generative AI technology, are being actively sought after and are expected to contribute substantially to AWS's performance.


Bullish Sentiment Growing In Amazon

Other analysts seem equally taken by AMZN at present, Stifel Financial Corp has Amazon's target price at $224, raising it from $200 and are keeping a Buy rating on the shares. Stifel has said that “The advertising environment continues to improve, e-commerce continues to “hang in there,” and subscription names “remain a mixed bag,”

Mirroring the same sentiments, DA Davidson also upgrades the price target for from $200 to $235 and keeps a Buy rating on the shares. Gil Luria, DA Davidson's analyst has been quoted to say that Amazon is a “favourite mega cap” for the firm and “calling for a year of positive trends in AWS as well as Retail profitability. AWS investments in data centers and their custom chips set it up well for the next leg of growth from GenAI. Outside of Microsoft's (MSFT) investment in Azure, no other competitor will even approach the reported $150B in data center investment by Amazon over the next 15 years”

Those are some pretty firm comments from DA Davidson, and you would want to see some confidence on the back of a $35 hike in price target. The reasoning is sound, and you have to wonder whether the investment Amazon is making will make as many waves as many expect. A year of positive trends certainly is a comment that will have shareholders excited.

Elsewhere on the street, Truist Financial Corp have also raised their price target on Amazon, aligning with other analysts in their stance. The price target set by Truist for Amazon has been raised to $216 (from $195), and the firm keeps a Buy rating on the shares. Expecting Amazon's Q1 earnings to surpass expectations, Truist adds that it sees multiple growth areas powering Amazon over the next several years.

The shared analysts views underline a comprehensive approach by Amazon that sends a clear message: despite short-term fluctuations, the long view on Amazon's stock is one of optimism, with analysts seeing a wide array of operational and strategic initiatives as credence for their continued support.

Amazon's (NASDAQ: AMZN) share price has dropped 1% in trading today and sits 8 points below the 52 week high hit last week.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.