Amazon (NASDAQ:AMZN) stock, like most of its tech peers, has outperformed the broader markets in terms of growth. It has gained about 43% year-to-date compared to an approximately 10% increase in the S&P 500 Index (SPX). While AMZN stock has appreciated substantially, a rebound in the AWS (Amazon Web Services- its high-margin cloud offering) segment will drive its stock higher, noted Mizuho Securities analyst James Lee.
He recommends a Buy on AMZN stock, while his price target of $160 implies 33.21% upside potential from current levels.
In a note to investors dated May 23, Lee wrote that his latest channel checks indicate that AWS’ Gen-AI (generative Artificial Intelligence) demand has been growing. The analyst added that AWS’ Gen-AI is priced higher than conventional computing, which will support revenues and margins.
Thanks to the strong demand and meaningful pricing, Lee believes “AWS revenue growth will likely trough in 2Q23” and start reaccelerating in 2H23.
Echoing similar sentiments, Jefferies analyst Brent Thill also sees more upside in AMZN stock. He expects Amazon’s share price to reach $135, implying 12.4% upside potential from current levels.
Thill expects a rebound in its high-margin cloud business in the second half of 2023 or the first half of 2024. Furthermore, the analyst believes that its ad business will likely deliver strong growth and expenses will moderate, supporting margins.
While Lee and Thill are bullish, let’s check what other analysts are recommending for AMZN stock.
What is Amazon’s Stock Price Target?
The easing of inflation, expected rebound in AWS, and cost-cutting measures will likely support its financials and stock price. Given the improving operating environment, AMZN stock has a Strong Buy consensus rating based on 35 Buy and one Hold recommendations. At the same time, analysts’ average price target of $134.85 implies 12.27% upside potential from current levels.
