Amazon: BofA raises target price

(CercleFinance.com) - On Friday Bank of America raised its target price for Amazon shares from $255 to $257, after publishing Q4 results described as "solid".


The US investment bank - which is still a buyer of the stock - points out that the Internet giant last night reported sales and net income of $187.8bn and $21.2bn respectively.

In comparison, Wall Street was targeting $187.3bn and $18.8bn respectively, the New York-based firm points out in a note.

However, BofA acknowledges that the Seattle-based group's sales forecast for Q1 came in below expectations, at $151bn-155.5bn vs. the consensus of $158.4bn.

Its analysts also note from the presentation that the company is planning capital expenditure of over $100bn this year, the 'vast majority' of which will be in AI.

These investments could put pressure on profit margins in the cloud business, BofA warns, which says it expects AWS to have a 34% margin in 2025, down from 37% in 2024.

But we consider AI to be the most buoyant theme in tech over the next ten years, and given that AWS is a big potential beneficiary, we think Amazon deserves the benefit of the doubt on this issue, BofA adds.

In its view, AWS is currently the best-positioned player in the AI-related services segment thanks to its 'three-layer' architecture equipped with Trainium chips, an advantage it believes the market underestimates.


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