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On Friday, Oppenheimer analyst Jason Helfstein increased the price target for Amazon.com (NASDAQ:AMZN) to $260, up from the previous $230, while maintaining an Outperform rating on the stock. The adjustment reflects a positive outlook based on higher financial estimates and a valuation extended to the year 2026. According to InvestingPro data, Amazon’s stock is trading near its 52-week high of $242.52, having delivered an impressive 46.73% return over the past six months. The company currently commands a market capitalization of $2.51 trillion, reflecting its position as a dominant player in both e-commerce and cloud computing. Helfstein’s optimism is driven by anticipated capital expenditures for fiscal year 2025, which are projected to be around $105 billion, compared to $83 billion for fiscal year 2024, and higher than both the operating company and Wall Street estimates of $88 billion and $84 billion, respectively.
The analyst’s commentary highlighted that Amazon Web Services (AWS) is experiencing significant demand signals. However, he also noted that AWS is currently facing capacity constraints, primarily due to chip shortages. These constraints are expected to ease in the second half of the year. With total revenue reaching $620.13 billion in the last twelve months and an EBITDA of $111.58 billion, Amazon continues to demonstrate strong financial performance. InvestingPro subscribers have access to 15+ additional exclusive tips and comprehensive financial metrics that provide deeper insights into Amazon’s growth trajectory. Helfstein emphasized Amazon’s belief that artificial intelligence (AI) represents the most substantial technological shift and opportunity since the advent of the internet. Amazon’s unintentional strategy of supporting all AI models is considered to be advantageous.
Helfstein has adjusted his forecasts for AWS’s quarterly year-over-year growth for fiscal year 2025 to 18% for the first and second quarters and 19% for the third and fourth quarters. This is a slight decrease from the previous uniform estimate of 20% growth for all quarters. Despite the guidance for first-quarter revenue being 3% below the operating company and Street estimates, the high-end figures excluding foreign exchange fluctuations and Leap Day align with expectations.
The report concludes with a projection that Amazon will continue to identify and capitalize on opportunities to reduce its cost-to-serve throughout fiscal year 2025. The new price target set by Oppenheimer is based on a valuation of 10 times the estimated AWS revenue and 5 times the estimated E-commerce gross profit for fiscal year 2026, which implies a 33 times fiscal year 2026 estimated P/E ratio excluding Project Kuiper. Currently trading at a P/E ratio of 49.68, Amazon maintains strong analyst support with a bullish consensus rating of 1.39 out of 5 (with 1 being the most bullish). Analyst targets range from $211 to $306, suggesting varied perspectives on the stock’s potential. For detailed valuation analysis and comprehensive insights, investors can access Amazon’s full Pro Research Report, available exclusively on InvestingPro.
In other recent news, Amazon.com has been the subject of several analyst reviews. Raymond (NSE:RYMD) James upgraded the company’s stock price target to $275, citing the strong performance of Amazon Web Services (AWS) and its AI business. The firm believes that constraints on growth due to chip and power availability will ease in the second half of the year, potentially leading to an acceleration in growth.
Similarly, Cantor Fitzgerald maintained an Overweight rating and a $270 price target for Amazon. The firm’s analysis suggests that despite a significant capital expenditure forecast for fiscal year 2026, Amazon’s core business remains robust. The firm sees a clear path for accelerated growth in AWS and potential for margin growth within Amazon’s retail division.
Redburn-Atlantic also reiterated a Buy rating and a $280 price target for Amazon, highlighting the company’s competent management of overcapacity issues, especially in its e-commerce segment. RBC Capital Markets, on the other hand, raised Amazon’s price target from $255 to $265, noting the company’s strong position in artificial intelligence (AI) and the potential for the company to keep growing its earnings.
Lastly, Cantor Fitzgerald maintained an Overweight rating and a price target of $270, emphasizing Amazon’s strong fundamentals and potential for sustained growth and profitability in the years to come. These recent developments underline the positive outlook held by multiple analysts regarding Amazon’s future prospects.
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