Amazon (AMZN) will likely be under pressure to deliver strong cloud computing results in its fourth-quarter earnings report after lackluster reports from Microsoft (MSFT) and Google (GOOGL). The tech giants’ massive investments in AI have been questioned after Chinese startup DeepSeek achieved AI breakthroughs at a much lower cost. Despite this, analysts believe that Amazon is well-positioned to capitalize on cheaper AI due to its massive cloud business and lower exposure to costly large-language models.
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Interestingly, Amazon Web Services (AWS) is expected to post its strongest revenue increase in eight quarters, with a 19.3% growth rate. In addition, some experts believe that AWS may have caught up in the AI race. This could mean that it has regained market share, which may lead to a less severe deceleration in growth compared to its rivals.
Separately, Amazon’s retail business is also expected to benefit from a healthy holiday shopping season as North American sales are projected to rise 9% year-over-year. This estimate is based on the company’s efforts to improve its delivery times, expand product merchandise, and focus on grocery, pharmacy, and fashion.
Is Amazon Stock Expected to Rise?
Overall, analysts have a Strong Buy consensus rating on AMZN stock based on 39 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 39% rally in its share price over the past year, the average AMZN price target of $261.78 per share implies 11.1% upside potential.
