Amazon stock is poised to get a boost from Amazon Web Services' growing ties to Nvidia whose "AI Woodstock" event underscored the rapid growth of artificial intelligence, especially in the enterprise, an analyst said Monday.
Monness, Crespi, Hardt analyst Brian White wrote Monday that AWS is poised to benefit after the "masses flocked" to Nvidia's San Jose, Calif. developer event last week. White reiterated a buy rating for Amazon with the report, with a share price target of 215.
"We believe the leading cloud service providers are well positioned to benefit from the early-stage ramp of generative AI projects, including AWS," White wrote to clients.
At the same time, White offered a more downbeat view of the AI frenzy, saying believes "the market will increasingly grow suspicious of the generative AI hype propagated across the tech landscape." That could drive greater investor scrutiny around enterprise software, the note said.
AWS-Nvidia Expand Partnership
Over the past year, Amazon has been positioning itself to win enterprise-level investments in artificial intelligence. That push includes several new initiatives with Nvidia that the companies announced last week, as White's client note detailed.
For one, Nvidia's new AI computing platform, Blackwell, will be available through Amazon Web Services. AWS will also host Nvidia's DGX Cloud AI training software service. The companies are also working together on cybersecurity and an AI supercomputer. Plus, Amazon and Nvidia announced tools to help companies train AI models using their own data.
The announcement built on an existing partnerships. At Amazon Web Services' client conference in November, Amazon announced AWS will be the first cloud provider to launch services with Nvidia's new GH200 Grace Hopper processors.
"Our collaboration with AWS is accelerating new generative AI capabilities and providing customers with unprecedented computing power to push the boundaries of what's possible," Nvidia Chief Executive Jensen Huang said in a news release on March 18.
Last week's Nvidia's event also featured partnership announcements with Microsoft, Alphabet and Oracle. Each company is competing to host the massive computing power companies require to run generative AI applications. Amazon is the largest cloud infrastructure provider by market share, but Microsoft has gained share in recent quarters.
Amazon Stock: What Else To Watch
White's note add that he expects Amazon will "continue to capitalize on the cloud, expand its digital ad business, innovate with AI, participate in health care opportunities, realize
efficiencies from a regional fulfillment network, and leverage a leaner cost structure."
On the other hand, potential risks come from regulatory headwinds and the possibility for further struggles in the broader economy.
On the stock market today, Amazon stock closed up by a half-percent at 179.71. Shares have gained 20% so far this year and the stock is up 84% in the past 12 months.
