Over the past few decades, Amazon (NASDAQ:AMZN) has transformed from a pioneering company into a true tech giant, driven by remarkable growth. Expending far beyond its origins in e-commerce, Amazon now operates extensively across the global digital landscape.
Like many of its peers, Amazon is harnessing AI to reshape its business model. By integrating AI tools and services throughout its infrastructure, Amazon is not only improving operational efficiencies but also forging new avenues for business growth.
However, while Amazon shares climbed 45% over the past year, the company has not fully capitalized on the AI frenzy that has gripped other technology stocks. In fact, according to investor Alpha Oracle, Amazon’s current share price doesn’t reflect the potential for future growth.
“Despite the recent increase in the stock price, it is still far away from its fair price,” Alpha Oracle opined.
Why? The investor points to several factors: “Amazon Marketplace will perform better, AWS earnings will improve, and the company will benefit from its AI investments.”
Regarding the Marketplace, as inflation appears to be tapering off, consumer behavior is adjusting accordingly. “With the sustained dominance of the Amazon Marketplace in e-commerce, I expect the company to benefit from upcoming macroeconomic developments,” Alpha Oracle added.
The investor also finds prospects for AWS, which saw its operating income almost double to $9.4 billion in Q1, of particular interest. “AWS remains a major growth area with innovations and more companies using this digital infrastructure for AI capabilities,” the investor explained.
Moreover, Alpha Oracle believes that AMZN is well-positioned to be a leader in the AI space. Beyond enhancing customer experiences with AI, as mentioned above, Amazon provides critical infrastructure for businesses to develop AI applications. This positions Amazon well to lead in scaling general AI applications through Amazon Bedrock.
With $85 billion in cash and short-term investments as of March, the investor views Amazon’s substantial resources as a competitive advantage in further advancing these technological capabilities.
Against this backdrop, Alpha Oracle rates Amazon as a Buy. (To watch Alpha Oracle’s track record, click here)
The Street analysts seem to be in agreement with this assessment. Over the past 3 months, all 42 analyst reviews have been bullish, culminating in a Strong Buy consensus rating. The average price target currently stands at $221.20, indicating a potential upside of 21%. (See AMZN stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
