Analysts believe that Advertising Trends could boost Amazon Stock on AWS

Amazon’s stock is predicted to continue its upward trajectory this year due to new revenue streams such as advertising and AWS, as well as cost-cutting measures in its retail operations, according to equity analysts at Jefferies. The analysts believe that Amazon shares, which have already risen by more than 30% this year, could grow by at least 18% more. They also anticipate that ads on Prime Video alone could bring in nearly $3 billion in revenue in fiscal 2024.

Jefferies analysts suggest that the growth of Amazon’s advertising and AWS businesses could significantly boost the company’s revenue, profit margins, and stock price as it expands beyond its already dominant position in e-commerce. They point out that Amazon’s investments in AWS are paying off, with the segment’s revenue growing by 17% year over year to $25 billion in the most recent completed quarter. CEO Andy Jassy has highlighted the growth potential across all of Amazon’s businesses, particularly in AWS, as the cloud storage industry and generative AI continue to expand.

The analysts emphasize that AWS and advertising offer a lucrative runway for Amazon’s stock, leading them to maintain a “buy” rating on the stock and raise their price target to $235 from $225. They believe that if advertising revenue and AWS grow faster than expected, the stock could see an even more substantial increase, potentially rising by more than 40% to $285. Amazon’s stock price late Tuesday was just below $200, indicating that the $235 price target represents an 18% rise.

Overall, the analysts are optimistic about Amazon’s prospects, noting that the company’s focus on high-margin businesses is driving improved profitability and enhancing its overall value. They highlight the success of AWS as a key driver of growth and anticipate that the advertising business could become a significant revenue generator for Amazon in the coming years, potentially bringing in billions of dollars in additional sales.

In conclusion, Jefferies analysts see Amazon’s stock as a strong buy, with significant growth potential fueled by its advertising and AWS businesses. They believe that Amazon’s stock price could continue to rise, driven by strong revenue growth and increased profitability across its various business segments. With Amazon’s innovative approach and successful expansion into new revenue streams, the company is well positioned for continued success in the future.

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https://www.investopedia.com/amazon-stock-expected-to-rise-aws-advertising-trends-8675373