Amazon’s CEO Andy Jassy is set to report the company’s fourth-quarter earnings after the bell on Thursday. Wall Street is optimistic about the demand for cloud services and the strength of Amazon’s retail business. Analysts have high expectations for Amazon’s performance in 2025.
Investors are anticipating strong results from the tech giant, with analysts noting positive drivers such as strong holiday demand and growth in advertising revenue. Of particular interest is Amazon’s cloud-computing platform, AWS, which is expected to be a key driver of growth in the fourth quarter and beyond.
Top analysts are closely watching Amazon’s outlook on AWS, artificial intelligence (AI), and ad revenue. Bank of America predicts that Amazon will exceed operating profit estimates and achieve $187 billion in quarterly sales. The bank emphasizes the importance of AWS growth, AI scaling, and the outlook for future expenditures.
Deutsche Bank anticipates an earnings beat driven by a favorable US consumer environment and increased demand for AI services. They expect AWS margins and retail gross profit to outperform expectations. The bank has a price target of $275 on Amazon, nearly 17% higher than the current price.
Wedbush Securities believes that investors may be underestimating Amazon’s potential for margin expansion in 2025. The firm expects Amazon to surpass fourth-quarter operating income estimates and continue to outperform expectations in the future. Wedbush is confident in Amazon’s ability to deliver strong results and anticipates meaningful margin expansion.
The headwinds impacting Amazon’s margin potential have made investors overly cautious, with rising costs from the firm’s satellite and AI efforts playing a significant role. Nevertheless, the company’s strengths in retail, fulfillment, and the higher-margin AWS and advertising segments are expected to propel the e-commerce behemoth towards further growth. Wedbush continues to rate Amazon as “Outperform,” upping its price target to $280, representing a potential gain of almost 19% from current levels.
Morgan Stanley highlights the value of robotics as a driver for Amazon’s warehouse operations, an aspect that investors may be undervaluing. Research analyst Brian Nowak emphasizes the efficiency benefits of Amazon’s industrial robots across various stages of order fulfillment, underscoring the potential for long-term EBIT growth. The introduction of automation in warehouses could yield significant cost savings, with the possibility of unlocking $10 billion in savings by 2030 if a substantial portion of Amazon’s US facilities are equipped with robotics.
Morgan Stanley maintains an “Overweight” rating on Amazon and echoes the $280 price target, indicating a potential upside of nearly 19% from current levels. Meanwhile, Mizuho sees positive signs for e-commerce as improving ad-spend growth in the fourth quarter suggests a normalization of consumer spending trends. Pricing enhancements for essential and discretionary items point towards a more robust consumer environment, further bolstering the case for Amazon’s growth prospects.
Overall, Mizuho remains bullish on Amazon, rating the stock as “Outperform” and setting a price target of $285, representing a 20% increase from current levels.
