Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
Tuesday, Cantor Fitzgerald reaffirmed its Overweight rating on Amazon.com stock (NASDAQ:AMZN), citing strong growth prospects for the company's cloud computing division, Amazon Web Services (AWS). The firm's analyst noted that AWS had experienced a year-over-year growth of approximately 25% in 2024, exceeding its target of 20%. This growth included a 3-5 percentage point contribution from General Artificial Intelligence (GenAI) activities, which are anticipated to double their impact to 10 percentage points in 2025. This growth trajectory aligns with Amazon's overall revenue growth of 11% in the last twelve months, contributing to its impressive $1.86 trillion market capitalization. InvestingPro analysis suggests the stock is currently undervalued, with 12 additional exclusive insights available to subscribers.
In the first quarter of the current year, AWS saw its growth rate slightly decrease to the low-20% year-over-year range, a modest dip from the mid-20% year-over-year growth observed in the last quarter of the previous year. Despite potential uncertainties that may arise from tariffs, the analyst reported that industry experts expect AWS to continue showing consistent growth throughout the fiscal year 2025. This optimism is rooted in the strong demand for AWS services and the increasing contribution of GenAI. The company maintains a strong financial position with an InvestingPro Financial Health Score of "GOOD" and operates with a moderate level of debt.
The analyst also highlighted that within AWS's AI workloads, the adoption of Bedrock has been significant, and its integration with Sagemaker is improving. Currently, most GenAI use-cases are focused on conversational AI, such as chatbots, while AI Agents are in the nascent stages of development and use.
Regarding the broader economic outlook, the analyst indicated that there is a mixed visibility at the moment. Some industry experts are wary of potential delays in spending due to the current macroeconomic conditions, while others have not yet observed any significant impact on their operations or spending patterns.
Amazon's commitment to innovation in cloud computing and AI, as evidenced by AWS's performance and growth trajectory, remains a key factor in Cantor Fitzgerald's rating. The firm's continued confidence in Amazon reflects the expectation that AWS will maintain its growth momentum, driven by strong demand and advancements in AI technologies.
In other recent news, Amazon.com Inc. reported significant developments across various sectors. The company introduced Amazon Nova Sonic, an AI model aimed at enhancing voice interaction capabilities in applications such as customer service and AI agents. Nova Sonic has demonstrated high-quality conversation capabilities, outperforming competing models in accuracy and cost-efficiency. Meanwhile, Wolfe Research adjusted its price target for Amazon shares from $270 to $200, maintaining an Outperform rating. The firm noted Amazon's potential to gain market share in a challenging economic environment, with revenue and operating income projections showing mixed results across quarters.
In another development, Amazon entered a preliminary agreement with Airbus to provide satellite connectivity for airlines through Amazon's Kuiper constellation. This collaboration aims to enhance Airbus’ High Bandwidth (NASDAQ:BAND) Connectivity Plus program. Additionally, Wedbush Securities reiterated its Outperform rating for Amazon with a $280 price target, highlighting the company's advancements in digital advertising. Amazon's Demand Side Platform has seen improvements, and the ad-supported Prime Video service has attracted more advertising revenue.
These recent developments indicate Amazon's strategic focus on expanding its technological capabilities and partnerships. The company's efforts in AI, satellite connectivity, and digital advertising reflect its ongoing pursuit of diverse revenue streams.
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