Analyst unveils new Amazon price target as stock tests $2 trillion

Apr 9, 2024

Amazon (AMZN) shares moved higher on April 8, taking the online retail and web services giant’s market value closer to $2 trillion ahead of its first-quarter earnings report later this month.

Amazon shares have added more than $370 billion in market value so far this year, trailing only social-media giant Meta Platforms (META) and semiconductor stalwart Nvidia (NVDA) among the best-performing Magnificent 7 tech stocks.

Related: Veteran analyst unveils Google stock price ‘line in the sand’

The gains have been tied largely to investor bets on its web services, streaming media, advertising sales, and its dominant position as the world’s largest online retailer.

The breadth of its business units and the capital spending required to keep it competitive have raised concerns that its profit margins might narrow. However, a renewed focus on cost-cutting is starting to pay off.

Over the past year, Amazon has executed big job cuts, overhauling its logistics, media, home-device technologies, and Twitch videogame-streaming divisions. At the same time, it has ramped up investments in AI technologies, which will further improve cash flow.

Amazon shares are one of the market's best-performing stocks in 2024, adding more than $370 billion in value this year.

<p>The Street/Shutterstock</p>
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<div><figcaption>Amazon shares are one of the market’s best-performing stocks in 2024, adding more than $370 billion in value this year.</p>
<p>The Street/Shutterstock</p>
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<p>Amazon’s chief financial officer, Brian Olsavsky, told investors earlier this year that “there’s a general feeling in most teams that we’re trying to hold the line on headcount” after “coming off a period where we’ve done a lot of hiring.”</p>
<h2>Amazon’s AI investments bearing fruit</h2>
<p>Amazon Web Services, the group’s cloud-computing division, is also set to benefit from the explosion in AI investments as companies adopt more sophisticated datasets that require enhanced storage and management capabilities.</p>
<p>Amazon launched a business-focused Chatbot, called Q, last year as part of its effort to keep pace with Microsoft’s Copilot. Amazon also plans to make a new series of AI chips that will complement those made by Nvidia to boost its servers’ speed and processing power.</p>
<p>And with profit and traffic improving in its core retail business as well, Amazon forecasts first-quarter revenue to be as much as $143.5 billion when it reports on April 25.</p>
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