Amazon (AMZN) is planning to sell the technology behind its lucrative advertising business to other e-commerce companies.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
Amazon, which is the largest e-commerce company in the world, has built a profitable ad business by charging merchants to promote products and listings on its platform. Now, Amazon is preparing to launch a new product called “Amazon Retail Ad Service.”
That new product will enable outside retailers and e-commerce companies to use Amazon’s technology to sell ads on their own websites, including through online search results. Amazon says multiple retailers are now testing the technology online with plans for a wider rollout later this year.
Ad Competition
The new advertising service puts Amazon in direct competition with Instacart (CART), which sells ad services to grocery store chains, as well as advertising technology firms such as Criteo (CRTO) that offer a similar service. In a news release, Amazon said its new ad service will keep retailers’ information separate from other parts of its sprawling business.
Amazon isn’t the only retailer that is launching an ad business. Other large retailers such as Walmart (WMT) have also built their own ad businesses to sell to third-parties. Amazon reported $14.3 billion in advertising revenue in the third quarter of 2024, latest data available.
Amazon’s stock has risen 45% in the last 12 months.
Is AMZN Stock a Buy?
The stock of Amazon has a consensus Strong Buy rating among 47 Wall Street analysts. That rating is based on 46 Buy and one Hold recommendations issued in the last three months. The average price target on AMZN stock of $249.62 implies 12.26% upside from current levels.
