Amazon stock pushed higher Tuesday before fading in afternoon trading. The tech giant is looking to build off a rally that started with its AI-focused cloud conference last week, with analysts offering positive views of Amazon's announcements.
James Lee, Amazon stock analyst at Mizuho, is the latest. He upped his price target to 260 from 240 in a client note Tuesday. A key theme for Amazon Web Service's re:Invent conference, he wrote, is that generative AI is reaching an "inflection point" with proof-of-concept projects moving into production mode.
Lee added, "We believe AWS addressed three key frictions to deployment: (1) lower computing costs by introducing first-party chips, making capacity flexible and shifting to smaller models; (2) reduce build-complexity of GenAI applications by automating coding, data integration into models, and guardrail setup through its managed platform Bedrock; and (3) add AI-agent functionality to automate workflows for advanced use-cases as foundational models reach a baseline reasoning level."
Lee now expects AWS to grow its revenue by 21% in 2025, up from his previous estimate of 19%.
On the stock market today, Amazon stock closed a fraction lower at 225.04.
AWS Flips The Narrative
At the conference last week in Las Vegas, AWS announced that Apple is among enterprises using its Trainium2 AI chip, while a Trainium3 chip will launch next year.
Amazon is also building an "UltraCluster" of custom AI chips and servers that will train the latest models from Anthropic, the AI startup Amazon has invested $8 billion into. Amazon Chief Executive Andy Jassy also announced a new line of AI models called Amazon Nova, which AWS will offer to enterprise customers through its Bedrock AI platform.
Analysts described the presentations as focused on proving Amazon can defends it lead in the cloud services market against Microsoft and Alphabet's Google.
"In our view, Amazon demonstrated AWS has become a formidable force in the gen AI world, flipping a narrative that favored competitors," Monness Crespi Hardt analyst Brian White wrote in a recent client note. White rates Amazon a buy with a 245 price target.
Jefferies analyst Brent Thill said commentary from within the customer conference indicated "AWS's AI products are dramatically better than last year." Thill rates Amazon a buy.
Amazon Stock Up 49% This Year
Amazon stock has gained 49% this year, compared to a 27% year-to-date gain for the S&P 500. Shares jumped 9% and reached a record 230.08 on Monday before pulling back to close the day lower.
Amazon stock is now above a 5% buy zone from a 201.20 consolidation pattern entry, according to MarketSurge. Shares broke out initially past that buy pint on Nov. 6, as part of a broader rally following the election of Donald Trump to a second presidential term. The stock pulled back in mid-November before its recent rally back to record highs.
Amazon's Relative Strength Rating sits at 87 out a best-possible 99. That means Amazon has outperformed 87% of stocks in the IBD database over the past 12 months. IBD recommends focusing on stocks with at least an 80 RS Rating.
