AWS, Advertising Trends Can Lift Amazon Stock, Analysts Say

The maturation of 2 of Amazon's (AMZN) divisions could thrust revenue, profit margin, and nan company's banal value higher arsenic it expands beyond its ascendant position successful e-commerce, Jefferies analysts wrote.

The company's bets connected Amazon Web Services (AWS) and advertizing should supply higher-margin gross streams arsenic they turn and nan institution shifts to making its unit operations much profitable, nan analysts wrote successful a Monday note. They maintained a "buy" standing connected nan shares, raising their value target to $235 from $225.

AWS, Advertising Businesses Provide Runway for Stock, Analysts Say

The $235 value target would correspond an summation of astir 18% from Amazon's stock value precocious Tuesday astatine conscionable nether $200. Jefferies analysts said they spot a bull lawsuit for shares to emergence complete 40%, to $285, if AWS and advertizing gross grows faster than expected. Amazon shares person risen complete 30% truthful acold this twelvemonth aft closing 2023 astatine $151.94.

"The 2 highest operating separator businesses are taking nan beforehand stage, driving improving profitability and EV [enterprise value] for nan full company," nan analysts wrote.

AWS lately has been a beardown root of maturation for Amazon, pinch gross successful nan conception increasing 17% year-over-year to $25 cardinal successful nan company's astir recently completed quarter. CEO Andy Jassy wrote successful a letter to shareholders earlier this twelvemonth that nan institution sees maturation imaginable successful each of its businesses, and said connected April's net call that AWS has grown arsenic nan unreality retention manufacture continues to grow, on pinch its connections to nan world of generative AI.

Ads first came to Amazon Prime Video earlier this year. The Jefferies analysts said that advertisement business could thrust astir $3 cardinal successful caller income for Amazon successful fiscal 2024, on pinch hundreds of millions of dollars from consumers who salary other to debar seeing nan ads.