E-commerce and cloud computing giant Amazon (NASDAQ:AMZN) reported stellar results for the first quarter of 2024, reinforcing analysts’ bullish stance on the company’s growth potential. AMZN stock has risen nearly 23% year-to-date, and analysts expect continued upside, driven by multiple catalysts, including the prospects for its cloud computing unit Amazon Web Services (AWS) in the artificial intelligence (AI) space.
AMZN’s Impressive Q1 Results
Amazon’s net sales grew 13% to $143.3 billion, while earnings per share (EPS) jumped to $0.98 from $0.31 in the prior-year quarter. Aside from solid top-line growth, the company’s streamlining and cost reduction measures drove the earnings higher.
Moreover, AWS sales growth accelerated to 17% from 13% in Q4 2023. The improvement reflected the easing of spending optimization by enterprises. Additionally, the cloud business is gaining from generative AI-led demand. Another key driver is the company’s advertising business, which witnessed a 24% rise in revenue. The ad business is growing at a faster rate than Amazon’s retail or cloud computing businesses.
While AMZN’s Q2 outlook fell short of expectations, analysts remain upbeat about the road ahead.
Analysts Remain Bullish on AMZN Stock
Following the Q1 print, Telsey Advisory analyst Joe Feldman increased the price target for AMZN stock to $215 from $200 and maintained a Buy rating, citing the company’s “robust” results and better-than-anticipated Q2 profit outlook. Feldman expects Amazon to continue to gain market share by capitalizing on its Prime member base, relationships with small businesses, and technological advancements.
Likewise, BMO Capital analyst Brian Pitz raised the price target for Amazon stock to $220 from $215 and reiterated a Buy rating on the stock. Pitz is optimistic about the company’s accelerating AWS growth path in the quarters ahead, supported by generative AI workloads and the reacceleration of migration from on-premise to cloud.
The analyst also sees the potential for double-digit gross merchandise volume (GMV) growth through at least 2025, with the company’s regionalization strategy enhancing margins. Also, Pitz believes that the Prime Video advertising revenue is an opportunity to look out for.
Is Amazon a Buy, Hold, or Sell?
With an impressive 41 unanimous Buys, Amazon stock scores a Strong Buy consensus rating. The average AMZN stock price target of $219.50 implies about 18% upside potential.
Conclusion
Amazon’s first-quarter results reflected strong execution across the company’s key businesses. Analysts are highly bullish about the company’s potential to grow its retail, AWS, and advertising businesses. Plus, Wall Street is upbeat about generative AI tailwinds that are expected to boost Amazon’s revenue.
