Global e-commerce platform Amazon.com (NASDAQ:AMZN) reported better-than-expected Fiscal third-quarter results yesterday, driven by double-digit growth in its Amazon Web Service (AWS) cloud computing business, advertising revenues, and unexpectedly upbeat Prime Day sales. Further, management kept raving about the multiple opportunities that generative artificial intelligence (AI) is providing in its AWS unit.
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CEO Andy Jassy noted in the earnings call that “there’s a lot of growth in front of AWS, I’m very optimistic about it.” He expects AWS to add tens of billions of dollars in sales in the forthcoming years. After several quarters of decelerating revenues owing to “optimization” in cloud spending by customers, AWS reported an almost in-line growth of 12.3% in Q3, amounting to $23.06 billion. Continued innovation and rapid execution have helped AWS sales to gain momentum, the CEO added. Jassy also said that AWS won some large contracts at the end of Q3, which will start showing results in the final quarter of the year.
While the cloud units of Amazon and Microsoft (NASDAQ:MSFT) fared better than expected, Alphabet’s (NASDAQ:GOOGL) cloud business failed to impress. Meanwhile, on the advertising front, all three tech giants reported robust year-over-year growth in the third quarter. On the contrary, Meta Platforms (NASDAQ:META) warned of potential weakness in the digital advertising market in the months ahead, in part due to the ongoing Israel-Hamas war and the tough macroeconomic backdrop.
Is Amazon a Buy, Hold, or Sell?
Following Amazon’s Q3 print, JMP Securities analyst Nicholas Jones reiterated a Buy rating on the stock with a price target of $175 (46.4% upside).
Overall, on TipRanks, AMZN stock commands a Strong Buy consensus rating based on 42 Buys versus one Hold rating. The average Amazon.com price forecast of $174.79 implies 46.2% upside potential to current levels. Year-to-date, AMZN stock has gained 39.3%.
