The progress of innovation in AI continues to accelerate, thanks to decreasing expenses involved in constructing and training extensive language models, ongoing innovations and enhancements by tech leaders and the collaborative efforts of open-source communities.
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That said, based on conversations with investors, Morgan Stanley analyst Brian Nowak thinks that some tech leaders are looked upon as ones yet to catch up with the progress being made in the space and are “structurally challenged.” Amazon’s (NASDAQ:AMZN) AWS gets mentioned among those names.
However, that is not a fair assessment, says Nowak, who thinks the opposite is true and that there is a big opportunity at play here for AWS. “We see AWS’ full AI tech stack, open-source integration, and (importantly) 10+ year focus on industry-specific innovation positioning it well to drive forward AI-based public cloud adoption,” said the analyst. “We think AWS remains well positioned to drive and benefit from the AI public cloud trends to come.”
To make it in the new AI-driven paradigm, Nowak thinks cloud/software participants will most likely need a combination of different elements to be successful, the important one being “domain and industry specific models and applications that businesses can adopt to drive efficiencies and/or create new business opportunities.” Continentally, that is the strategy Amazon has embraced over the past decade with many of the company’s innovations helping other businesses push ahead.
It should also be noted that more than 100,000 of AWS’ ~1.5 million data and analytics clients are already making use of machine learning and generative AI.
Additionally, there are already early instances of AWS working on industry-specific AI-based products in Healthcare (Carbon Health), Financials (Banco Bilbao Vizcaya Argentaria) and Media (Snap) and Nowak thinks there will be others on the way. “We see more industry specific offerings and use cases across AWS’ AI tools driving outsized growth and look for further announcements at AWS Summit Series events and AWS re:Invent in November,” he went on to say.
So where does this all leave investors? Nowak reiterated an Overweight (i.e., Buy) rating on AMZN to go along with a $150 price target. Should the figure be met, investors stand to pocket gains of 16% over the one-year timeframe. (To watch Nowak’s track record, click here)
So, that’s Morgan Stanley’s take, what does the rest of the Street have in mind for AMZN? Most are also expecting further success. The stock garners a Strong Buy consensus rating, based on 37 Buys and a single Hold. The forecast calls for 12-month returns of ~10%, given the average target clocks in at $139.80. (See Amazon stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
