One theme that has taken center stage in 2023 is that of generative AI (artificial intelligence). Spurred on by the viral popularity of AI bot ChatGPT, mega-caps Microsoft and Google have already set off on a one-against-one race to see who can squeeze the most out of this opportunity. And a massive opportunity it certainly is.
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Piper Sandler analyst Thomas Champion sees generative AI as the “next major revolution in technology that could have far reaching implications across both consumer and enterprise sectors.” In total, he thinks there’s a market opportunity of $100 billion+ here.
While some of the Big Tech stalwarts have been staking out their positions, one company that had so far been noticeably missing from the AI conversation is Amazon (NASDAQ:AMZN).
But that has now changed; in a recent letter to shareholders, CEO Andy Jassy officially mentioned generative AI for the first time, noting that the company is investing heavily in Large Language Models (LLMs) and Generative AI, with its cloud computing service AWS naturally getting the bulk of attention.
This has not gone unnoticed by Champion, who writes that AWS offers “products across the ML (machine learning)/AI spectrum including from model building, infrastructure, and implementation resources used by its ~100K customers. “
There are also partnerships in place with big players in all things ML. Early last year, to speed up artificial intelligence research and development, Meta chose AWS as its long-term strategic cloud provider. More recently, AWS joined forces with Hugging Face, whereby the two will collaborate on creating generative AI applications.
Furthermore, Champion highlights generative AI’s multiple use cases for Amazon: ““AWS conversational AI can reduce operational costs through chatbots and virtual assistants. AI for DevOps can help software developers innovate and streamline operations. Intelligent Document Processing & Intelligent Search help organizations handle and analyze large quantities of data.”
Turning these thoughts into grading and numbers, Champion rates AMZN shares as Overweight (i.e., Buy) while his $123 price target suggests the stock will post growth of 20% over the coming months. (To watch Champion’s track record, click here)
Over the past 3 months, 36 analysts have waded in with AMZN reviews, and one fencesitter aside, all others are positive, naturally providing the stock with a Strong Buy consensus rating. The forecast calls for 12-month returns of ~33%, given the average target currently stands at $135.88. (See Amazon stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
