Amazon (AMZN) / Jeff Bezos 02 (Nov 18 - Dec 26)

[winston]

vested

Amazon’s business spans multiple industries: E-commerce, cloud computing, advertising, video and music streaming, grocery shopping and healthcare.

What’s more impressive than the breadth of the company’s operations is the fact that it is a leader — or at least, one of the leaders — in many of the niches where it operates.

It has a runaway lead in the U.S. e-commerce space, for instance, while also holding the top spot in the global cloud market.

That already tells us a lot about the strength of Amazon’s business. It also highlights that the company has multiple avenues for growth.

Consider Amazon’s core e-commerce operations. Online transactions still represent less than 20% of total retail activity in the U.S., so there is a vast runway for growth here, one that Amazon should successfully ride for a long time given its lead and wide moat thanks to the network effect.

And although Amazon’s e-commerce business is a low-margin operation, the company is slowly working to address that. The tech leader’s increased reliance on industrial robots could help it cut costs and improve efficiency, potentially boosting e-commerce margins.

Amazon’s advertising business also looks promising, as it has been one of its fastest-growing segments for years.

Of course, the company’s most exciting unit is arguably its cloud division, Amazon Web Services. What CEO Andy Jassy said a few years ago still rings true: Cloud computing and generative artificial intelligence (AI) represent massive growth opportunities. Amazon is making significant infrastructure investments that could allow it to cash in on these fast-growing markets for years to come.

Beyond that, the company is slowly making progress with its healthcare ventures. It has successfully disrupted the pharmacy landscape in the U.S., for instance, thanks to the same highly convenient and fast, same-day delivery model it used to dominate the e-commerce landscape and take market share away from legacy brick-and-mortar retail stores.

Amazon is well-positioned to deliver outstanding returns as it makes headway in its core markets while profiting from new opportunities, such as healthcare.

Although the stock has lagged broader equities over the past 12 months, long-term investors should stay put.

Source: Daily Trade Alert

[winston]

vested

<Research> Citi Raises Amazon (AMZN.US) TP to USD285, Upgrades AWS Forecast

Citi published a research report indicating that, given the ongoing demand for artificial intelligence and the bank's analysis of revenue contributions from Anthropic, OpenAI, and core (non-AI) workloads, it has upgraded its forecast for Amazon's (AMZN.US) AWS.

As AWS strengthens its partnerships with Anthropic and OpenAI, Citi now predicts AWS revenue will grow by 28% YoY in 1Q24 and by 29% for the entire year, with growth accelerating to 37% next year.

The result is that AI revenue is forecasted to account for approximately 58% of AWS's incremental revenue in 2026 and about 72% in 2027.

Citi believes AWS can enhance its infrastructure capacity based on demand. Although the bank acknowledges concerns about AWS's return on investment, competition, and limited visibility of free cash flow, it believes AWS's position is increasingly favorable due to rapid monetization following capacity expansion, accelerated revenue growth, and rising operating income.

Citi reiterated its "Buy" rating on Amazon and raised the target price from USD265 to USD285.

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

vested

<Research> JPM Raises Amazon (AMZN.US) Cloud Business Growth Forecast, TP Raised to USD280

JPMorgan has raised its forecast for Amazon's (AMZN.US) Amazon Web Services (AWS) growth for the first to third quarters of this year by 2% to 3%, and increased next year's growth rate by more than 4%, primarily driven by the migration of traditional workloads to the cloud and increased AI adoption.

The firm forecasts AWS growth to range between 28% and 30% for all four quarters of this year, maintaining a 26% growth rate for next year.

The firm noted that AWS has expanded its partnership with OpenAI to a USD138 billion commitment over eight years, expecting AWS's order backlog to increase by more than USD100 billion QoQ in the first quarter.

In terms of costs, the prices of New York oil futures, diesel, and retail gasoline, have surged sharply in recent weeks.

Amazon has some fuel supplies under contract or mixed contracts, which should alleviate some related pressures.

However, the rise in fuel prices is expected to impact operating profit by approximately USD125 million and USD400 million in the first two quarters of this year, with an annual impact of about USD1.5 billion, assuming about half of Amazon's fuel supply prices are affected by spot prices.

Additionally, Amazon is investing in international pricing and fast e-commerce businesses, particularly in emerging markets, which may pressure international operating profits. The strengthening USD has also weighed on Amazon's net sales.

The firm has lowered its forecast for Amazon's operating profit this year by 1% to USD94.5 billion, but raised next year's forecast by 3% to USD122 billion.

For the first quarter, the total operating profit is projected at USD20.6 billion, with the company's guidance range between USD16.5 billion and USD21.5 billion, and USD95.5 billion for the full year.

As AWS expands its leading advantage in the AI field, the improvement in demand trends is encouraging for the firm.

Despite the short-term pressure on net operating profit trends due to rising fuel prices and international investments, the firm remains optimistic about Amazon's medium-term profit margin expansion trajectory.

The firm has raised Amazon's target price from USD265 to USD280, maintaining an "Overweight" rating.

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN