Two 59%+ winners, four above 25% in Aug – How this AI model keeps picking winners
On Friday, Wolfe Research demonstrated a continued positive outlook on Amazon.com (NASDAQ:AMZN) stock by raising the price target to $270 from the previous $250, while reiterating an Outperform rating. The research firm's confidence in the tech giant, which boasts a market capitalization of $2.32 trillion and maintains a "GREAT" financial health score according to InvestingPro, is rooted in a multi-faceted thesis that underscores various growth drivers.
The analyst from Wolfe Research, Shweta Khajuria, highlighted key factors contributing to the firm's optimistic stance. These included anticipated improvements in retail margins due to gains in operational efficiency, the impact of automation, growth in advertising revenue, and sustained international profitability. The company already demonstrates strong operational performance with a gross profit margin of 48.41% and revenue growth of 11.93% over the last twelve months.
Furthermore, the analyst expressed expectations for Amazon Web Services (AWS) to maintain robust and sustainable revenue growth. This projection is based on the increasing demand for AI-based workloads, the deployment of Trainium chips, and developments in Anthropic, which are expected to drive high-teen percentage growth.
In addition to efficiency and AWS growth, the firm anticipates that Amazon will continue to consolidate its market share. This is attributed to the company's ability to deliver quickly and offer a wide range of non-discretionary items, which is seen as a significant competitive advantage in the e-commerce space.
Wolfe Research had initially named Amazon as a top pick in July 2024, and their latest adjustment in the price target suggests that their assessment of Amazon's market position and growth potential remains highly favorable. The firm's analysis underscores the strategic initiatives that Amazon has been implementing, which are expected to drive the company's performance in the near future.
With a remarkable 48.33% return over the past year and trading near its InvestingPro Fair Value, Amazon continues to demonstrate its market leadership. Discover 13 additional key insights about Amazon and access comprehensive analysis through the Pro Research Report, available exclusively on InvestingPro.
In other recent news, Amazon.com is now dealing with a proposed class action lawsuit that alleges misuse of nearly $350 million in forfeited 401(k) funds. The suit, filed by Amazon employee Cory Curtis, claims that the company used these funds to offset its own contributions instead of reducing administrative fees for over 20,000 participants. In the financial sector, RBC Capital Markets and Tigress Financial Partners have both raised their price targets for Amazon, highlighting the company's robust position in e-commerce and cloud services. RBC Capital also emphasized Amazon's rapidly growing advertising business as a significant contributor to future revenue growth.
Similarly, Canaccord Genuity has increased its price target for Amazon shares, citing growth prospects across multiple sectors including eCommerce, cloud computing, and advertising. On the labor front, workers at seven Amazon facilities across the U.S. recently went on strike, demanding the company engage in contract negotiations with their union, the International Brotherhood of Teamsters.
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