Goldman Sachs lifts Amazon stock target to $255 on strong Q4

On Friday, Goldman Sachs analyst Eric Sheridan updated the price target for Amazon.com (NASDAQ:AMZN) to $255 from $240, while maintaining a Buy rating on the stock. Sheridan highlighted Amazon’s fourth quarter performance, which showed solid results, aligning with Goldman Sachs’ estimates due to a robust holiday season and a 19% year-over-year growth in AWS revenue. With the stock trading near its 52-week high of $242.52 and showing an impressive 46.7% gain over the past six months, InvestingPro analysis suggests the stock is slightly overvalued at current levels.

Amazon exceeded its operating income guidance for the quarter, reporting over $21 billion versus the $20 billion high-end guidance. This quarter marked the eighth consecutive period of year-over-year margin improvement for Amazon in both North America and International segments, with the company maintaining a healthy gross profit margin of 48.4%. The company’s capital investments surged in the fourth quarter, and management indicated this higher level of spending as the new norm for 2025, anticipating over $110 billion in capital investments, a growth of over 40% year-over-year, primarily driven by technology infrastructure investments focusing on AWS and AI opportunities. InvestingPro data reveals Amazon’s strong financial health with an overall score of "GREAT," supported by robust cash flows and moderate debt levels.

Despite facing headwinds such as significant foreign exchange challenges and the impact of the 2024 leap day, Amazon management conveyed a positive outlook on the operating environment. However, Sheridan noted that Amazon shares, which had risen 28% since the last earnings report compared to the S&P 500’s 7% increase, might need time to adjust to the detailed forward operating estimates provided by the company.

The report also mentioned that Amazon’s Q1 2025 performance would be affected by pronounced foreign exchange headwinds, which include a $2.1 billion net sales headwind, and the impact of lapping the additional sales from the 2024 leap day, which contributed $1.5 billion in net sales. Additionally, AWS growth is currently being impacted by capacity constraints, which are expected to ease in the second half of 2025. Management also discussed accounting changes related to the useful life and depreciation that will likely affect AWS in 2025.

In other recent news, Amazon.com has been the subject of several analyst notes following its Q4 results. Citi analysts have adjusted Amazon’s stock price target to $273, maintaining a Buy rating. Despite a Q1 2025 revenue and operating income guidance falling below consensus, they believe that Amazon’s significant capital expenditure investments, projected to exceed $100 billion, will fuel increased demand for Amazon Web Services (AWS), particularly in the GenAI sector.

Pivotal Research Group has reiterated its Buy rating on Amazon’s shares, maintaining a $260.00 price target. They forecast robust growth for Amazon, projecting over 11% revenue compound annual growth rate over the next five years, underpinned by a 25+% CAGR in AWS and a 7% increase in other business segments.

Canaccord Genuity has maintained its Buy rating on Amazon’s shares, increasing the price target to $280 from $265. They note that Amazon’s Q4 results showed total revenue in line with consensus and operating income exceeding expectations. The firm anticipates continued capital expenditures driven by investments in AI to meet increasing demand in this rapidly advancing sector.

DA Davidson analysts have increased their price target on Amazon’s shares to $280, up from the previous $235, while maintaining a Buy rating. The revision follows Amazon’s recent earnings report, which revealed an uptick in Retail profitability and consistent growth in AWS.

Lastly, Piper Sandler adjusted its financial outlook for Amazon, increasing the price target to $265 from the previous $225, while maintaining an Overweight rating. The firm justifies the heightened capital expenditures on AI as a sensible move for Amazon, highlighting the potential for leverage in the e-commerce sector.

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