From Yahoo Finance, February 7:
Amazon wants to spend $104 billion, and the stock gets clipped: What Wall Street is saying....*****.... Pivotal Research analyst Jeffrey Wlodarczak
- Rating: Buy/Reiterated
- Price Target: $260/Reiterated
"Amazon has a deep moat around their core businesses driven by their unmatched scale and appears to have numerous healthy organic revenue growth opportunities driven primarily by their high margin AWS cloud segment (which we expect to grow from 17% of revenue to ~35% in 5 years), extension of their e-commerce/fulfillment arms into new segments/internationally, continued rapid growth in their advertising business [already #3 in the world behind GOOG (BUY) and META (BUY)] and proven ability to develop new successful products/revenue streams leveraging their massive scale. This is all enhanced by what we believe is the potential to materially boost operating margins driven by scale, leveraging robotics/AI and benefits from an increasing % of revenue from high margin cloud computing/advertising combined with what appears to be an attractive valuation. AMZN remains on track at AWS and appears ahead of schedule on better monetization in its core retail/advertising/subscription businesses."
DA Davidson analyst Gil Luria"Commentary from management suggested that AWS is healthy with adoption across their services, whether they be AI-related or non-AI. Furthermore, it was noted that while it wasn't a huge impact, once AWS becomes less capacity constrained, they expect they'll be able to accelerate growth even more which they expect to occur in the back half of the year. We continue to believe that AWS is the best positioned of the three hyperscalers, as conversations with our DEN experts indicate that Amazon has quickly caught up and now surpassed Azure in AI-related services."
- Rating: Buy/Reiterated
- Price Target: $280/Previous: $235
JP Morgan analyst Doug Anmuth
- Rating: Overweight/Reiterated
- Price Target: $270/Reiterated
"Amazon views GenAI as the largest opportunity since cloud and the biggest tech shift since the Internet, w/virtually every app likely to infuse GenAI and most companies utilizing agents over time. Amazon views the $26.3B capex in 4Q as a reasonable representation of its 2025 capital investment rate, translating to about $105 billion in 2025 annual capex. The majority of spend will support growing need for tech infrastructure for demand across AI services, along w/support for North America and International. Amazon noted it only procures infrastructure given strong demand signals, which we view as bullish for AWS’ multi-year growth trajectory. In light of DeepSeek, CEO Andy Jassy believes the cost of inference will substantially come down over time. However, similar to cloud, where AWS cut prices 134 times between 2006-2023, Amazon believes lower inference costs will increase customers’ total spending as customers infuse applications w/inference and GenAI (i.e. Jevons Paradox). Like for Meta (META) and Alphabet (GOOG), heavy infrastructure investment should be a competitive advantage, and we believe the spending bodes well for multiple years of strong AWS revenue growth."....
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