Stock of the week 07.02.2024: Amazon
Amazon expects cloud revenues growth will accelerate powered by AI
Amazon's stock price has doubled from its start-of-2023 low up until now, marking its best performance since 2015. This momentum could continue into 2024 if the company maintains its profitability in online retail and remains competitive in the cloud-computing arena.
With a nearly $1.75 trillion market cap, Amazon leads in e-commerce and cloud services via Amazon Web Services (AWS). The firm is also expanding into generative AI and advertising, which are expected to fuel future growth. However, Amazon still faces a significant antitrust battle in the U.S.
Investors were keenly awaiting Amazon's Q4 earnings report, which stated a $1.00 of earnings per share (EPS), greatly exceeding expectations by $0.2. The report caused a price surge over 8% from the 7th January’s opening up until now.
Amazon’s advertising division is predicted to be the fastest-growing segment. AWS remains a crucial profit driver, despite slowing revenue growth and concerns about its positioning in the generative AI market (5). Nonetheless, analysts predict AWS revenue will reaccelerate, supported by increased demand for AI.
Here is how the bank analysts currently view the company:
The consensus of the bank analysts is "strong buy." Out of the 61 analysts covering the share, 59 rate the stock with "Buy,” 2 with "Hold," and 0 analysts recommend selling the stock.
The average expected upside of the stock price for the next six to twelve months is currently ca 20.6% (closing price on 06.02.2024).
Sources:
Amazon predicts cloud growth will gain steam as earnings bounce back (ft.com)
https://www.statista.com/statistics/274255/market-share-of-the-leading-retailers-in-us-e-commerce/
https://www.investors.com/news/technology/is-amazon-stock-buy-now-amzn/
https://www.investors.com/news/technology/amazon-stock-how-amzn-became-an-advertising-juggernaut/
