Amazon (AMZN) shares dropped on Friday, despite the company reporting strong second-quarter results. However, five-star-rated analyst Doug Anmuth at J.P. Morgan sees this dip as a buying opportunity, urging investors to “buy the pullback.” Notably, Anmuth reiterated his Buy rating on AMZN stock and raised his price target from $255 to $265, implying an upside of 23% from current levels.
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Where Amazon Fell Short in Its Q2 Report
Although Amazon delivered solid second-quarter results, investors were disappointed. According to Anmuth, the main reason for the stock’s decline was the underwhelming performance of its cloud business, AWS (Amazon Web Services), which didn’t meet the high expectations.
While AWS revenue grew 17.5% year-over-year to $30.9 billion, it fell short compared to the stronger growth seen at competitors. In contrast, revenue at Microsoft’s (MSFT) Azure rose 39%, and Google’s (GOOGL) Cloud grew 32% in the latest quarterly results. Moreover, the slow growth was especially disappointing because Amazon spent a record $31.4 billion on capital expenditures in the quarter.
Wall Street Stays Bullish on AMZN Stock
In addition to J.P. Morgan, several top Wall Street analysts reiterated their Buy ratings on AMZN stock and boosted their price targets.
For instance, Citi’s five-star-rated analyst Ronald Josey raised its target from $265 to $270, stating that Amazon’s higher spending signals strong ongoing demand as AWS works to ease infrastructure capacity limitations.
Likewise, RBC Capital’s Brad Erickson lifted his price target to $240. Erickson called Amazon’s results a “mixed bag.” He highlighted that Amazon’s retail business is doing very well, supporting the bullish case for the stock. However, AWS was a letdown. According to Erickson, its growth didn’t pick up like rivals, profit margins were weaker than expected, and management’s comments didn’t ease concerns that AWS might be struggling to grab a fair share of AI-driven demand.
Is Amazon a Buy, Sell, or Hold?
According to TipRanks, AMZN stock has a Strong Buy consensus rating based on 44 Buys and one Hold assigned in the last three months. At $265.05, the Amazon average share price target implies an upside of 23.4% from the current level.
