Jefferies analysts hiked the price target on Amazon (NASDAQ:AMZN) shares to $150 from the prior $135 per share after the stock gained more than 50% year-to-date.
The analysts argue that a run-up in shares is a result of several factors, including improving profitability, an AWS recovery in sight, and the perception of long-term AI tailwinds.
“We see AMZN as a core beneficiary from the rise of AI as AWS benefits from increased usage to train and run AI models. While AMZN lags behind its mega-cap peers in generative AI capabilities today, the AI opportunity remains early, and we expect AMZN’s rich history of innovation will help them close the AI gap over time,” they said in a note.
Moreover, the analysts see upside potential relative to consensus, which should help the stock to rally further.
“AMZN continues to improve profitability through cost rationalization and improved efficiency, driving an expected inflection in Operating Margin in ’23 to 3.9% (from 2.4% in ’22). We expect increased cost efficiencies will continue to drive the margin recovery and support positive Operating Income estimate revisions through 2024 as AMZN grows into its overbuilt logistics capacity.”
Amazon stock closed at $125.78 yesterday.
