Analyst on Wall Street Predicts Amazon Shares Reaching $270; Worth Investment Consideration?
Amazon (AMZN decreasing by 0.73%), once again, left Wall Street impressed with its powerful earnings report.
The juggernaut in e-commerce and cloud computing delivered impressive growth and widening profit margins in its third-quarter financial report. The quarter saw revenue surge by 11% to reach $158.9 billion, a clear indication of its dominance in the e-commerce sector. The growth in revenue for Amazon Web Services, its cloud computing division, continued to accelerate, overcoming an earlier period of economic uncertainty.
Friday saw the stock soar by 6% following these announcements, and Wall Street responded with a series of price hikes on target, indicating analysts anticipate further gains in the stock within the next year.
Will Amazon reach $270?
Truist recently bumped up its price target on Amazon to an astounding $270, signaling a potential increase of more than 35% in the stock price. The firm retained its 'Buy' recommendation on Amazon.
Reports suggest Truist recognized the robustness of Amazon's international segment and expanding margins in North America and AWS.
Intriguingly, the international segment, traditionally a money pit for the company, managed to transform a $95 million loss into a staggering $1.3 billion profit. Moreover, overall operating income surged from $11.2 billion to $17.4 billion, as its more profitable ventures continue to flourish.
Should I buy Amazon?
Amazon is also focusing on significant investments in capital expenditures on AWS, preparing for the surge in demand from AI. The company announced plans to splurge $75 billion on capex this year and even more next year, surpassing its net income for both years.
While leading the field in cloud infrastructure, Amazon understands the importance of investment to maintain and enhance its position, especially as demand for AI is on the rise.
Amazon's robust network of competitive advantages, coupled with the resilience of its higher-margin businesses, allows it to make such substantial investments with ease.
Investors with a long-term outlook may still view Amazon as a buy, though reaching $270 within a year may be somewhat challenging.
Given Truist's increased price target for Amazon to $270, there's a potential for significant gains in the finance sector through investing in AMZN. The company's robust international segment and expanding margins in North America and AWS are key drivers for this predicted growth.
As Amazon continues to invest heavily in capital expenditures on AWS, preparing for the rise in AI demand, investors with a long-term perspective might still consider it a good opportunity for investment, despite the challenge of reaching $270 within a year.
