Amazon’s Stock Targets: Will It Hit $225? Here’s What Experts Are Saying! 📈

As of June 2024, Amazon (NASDAQ: AMZN) is making significant advancements in AI and cloud computing, particularly through its Amazon Web Services (AWS) division. Key developments include Amazon Bedrock, a managed service offering high-performing foundation models, and a generative AI hub in collaboration with SAP. Amazon’s stock has shown strong performance, with a 216% increase in Q1 earnings and a 13% rise in sales. Analysts predict continued growth, with a 25% rise in earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More for 2024. Financial advisors have increased their positions in Amazon stock, reflecting strong institutional confidence. Short-term predictions indicate a 44% earnings growth in 2024, with long-term forecasts suggesting substantial stock price gains by 2025 and 2026. Despite potential volatility due to macroeconomic factors, analysts remain optimistic about Amazon’s future, driven by AWS, AI, and e-commerce.

AI and Cloud Computing Developments

Amazon Bedrock: Revolutionizing AI Applications

Amazon is heavily investing in artificial intelligence (AI) through its Amazon Web Services (AWS) division. A notable development is Amazon Bedrock, a fully managed service offering high-performing foundation models via a single API. This service aims to help companies build generative AI applications with enhanced security and privacy. The introduction of Amazon Bedrock represents a significant leap in making AI more accessible and functional for various enterprises.

AWS and SAP Integration: A New Era of Enterprise AI

Recently, AWS and SAP integrated to create a generative AI hub within SAP AI Core. This collaboration is expected to streamline processes and provide AI-driven insights for enterprise customers, enhancing operational efficiency and decision-making capabilities. The integration signifies Amazon’s commitment to expanding AI functionalities within its cloud services, positioning AWS as a leader in enterprise AI solutions.

Stock Performance and Analyst Ratings

Impressive Q1 Earnings and Future Projections

Amazon’s stock has been performing well in 2024, buoyed by strong Q1 earnings. On April 30, Amazon reported a 216% growth in earnings and a 13% increase in sales, reaching $143.3 billion. Analysts predict that Amazon’s second-quarter earnings will rise by 87% to $1.22 per share, with a full-year gain of 76% to $5.10 per share. For 2024, Wall Street forecasts a 25% rise to $6.39 per share, reflecting strong confidence in the company’s financial health and growth trajectory.

Revised Price Targets and Market Confidence

Baird analysts have recently revised their price target for Amazon shares from $210 to $213, reflecting a positive outlook despite potential margin contractions in AWS due to increased operating expenses and the integration of lower-margin generative AI workloads. They also anticipate that North American Retail margins will stabilize at low single-digit levels, while International Retail is expected to achieve sustained profitability within the next 2-3 years. This optimistic revision underscores the market’s confidence in Amazon’s ability to navigate challenges and capitalize on growth opportunities.

Institutional Investments

Increased Positions by Financial Advisory Firms

Several financial advisory firms have increased their positions in Amazon stock, indicating strong institutional confidence in the company’s future performance. Pathway Financial Advisors LLC, Lantz Financial LLC, and Inscription Capital LLC have all recently acquired additional shares of Amazon. This trend highlights the positive sentiment among institutional investors regarding Amazon’s strategic direction and growth potential.

Short-Term Predictions (2024-2025)

Earnings and Revenue Growth

Analysts expect Amazon’s earnings to grow significantly in the near term. For instance, Amazon’s earnings are projected to rise by 44% in 2024, with nearly 30% growth expected during both 2025 and 2026. The consensus one-year price target for Amazon stock is $218.23, representing a 17.26% upside from the current stock price of $186.10. These projections underscore the market’s bullish stance on Amazon’s short-term growth prospects.

Stock Price Targets

TipRanks offers a 12-month projection with an average price target of $209.74 for Amazon stock. Wedbush analysts have set a price target of $225, citing strong performance in AWS and advertising as key drivers. These targets reflect the high expectations for Amazon’s stock, driven by its robust business segments and strategic initiatives.

Volatility and Market Conditions

Analysts acknowledge potential volatility in Amazon’s stock price due to macroeconomic factors such as interest rate changes. For example, if the forward price-to-earningsThe price-to-earnings ratio, often abbreviated as P/E ratio, is a fundamental metric used by investors and analysts to evaluate the relative value of a company's shares in the stoc... More (PE) ratio increases, the stock price could rise to $195 per share, but if it decreases, the stock price could fall to $122 per share. This volatility highlights the importance of considering broader market conditions when evaluating Amazon’s stock performance.

Long-Term Predictions (2025-2030)

Sustained Growth

Long-term predictions for Amazon’s stock are highly optimistic. CoinPriceForecast predicts that Amazon’s stock price will reach $282 by the end of 2025, reflecting a 52% gain. Long Forecast suggests that Amazon’s stock could see moderate increases, with projections ranging from $294 in January 2025 to $506 in August 2025. These projections indicate sustained growth and significant gains for Amazon’s stock in the long run.

Revenue and Earnings Projections

By 2025, analysts expect Amazon to achieve revenue growth of just over 11% and an EPS of $5.74, with a stock price estimate of $287, representing a 54.22% increase from the current price. For 2026, the stock price is estimated to be $371, with an EPS of $7.42, marking a 99.36% gain over today’s share price. These projections highlight the strong long-term potential for Amazon’s financial performance and stock value.

AI and Cloud Computing: Drivers of Long-Term Growth

Amazon’s investments in AI and cloud computing are expected to drive long-term growth. AWS, in particular, is projected to benefit significantly from the integration of generative AI features, which could lead to substantial revenue increases. The continuous innovation in AI and cloud services positions Amazon as a key player in these high-growth sectors.

Forecast for the Cloud Computing Market

The forecast demand for the cloud computing market shows significant growth potential in the coming years. Here are the key projections:

Overall Market Growth:

• The global cloud computing market is expected to reach approximately $680 billion in 2024[1].
• By 2028, the worldwide revenue in the public cloud sector is projected to hit $1.1 trillion, marking an increase of about 80% from 2023[1].
• The market is anticipated to surpass $1 trillion by 2028 and reach $1.6 trillion by 2030[2].
• According to Markets and Markets, the cloud computing market is expected to grow to $1,266.4 billion by 2028 at a Compound Annual Growth RateThe world of finance is replete with complex concepts, but one that stands as a cornerstone for investors seeking to gauge returns is the Compound Annual Growth Rate (CAGR). Often ... More (CAGR) of 15.1%[3].

Segment-Specific Growth:

• Software as a Service (SaaS): The market value is projected to grow from about $190 billion in 2023 to $232 billion by 2024[1].
• Infrastructure as a Service (IaaS): This segment is predicted to expand by approximately 30% in 2024 compared to 2022[1].
• Platform as a Service (PaaS): The market value is expected to exceed $176 billion by 2024[1].

Regional Growth:

• The United States is projected to spend over $258 billion on public cloud services in 2023[1].
• The Asia-Pacific region (excluding China) is anticipated to reach $200 billion in total cloud spending by 2024[1].

Industry-Specific Growth:

• The healthcare cloud computing market is projected to grow by $201.1 billion by 2032[1].
• The container management market has seen accelerated growth of about 30% over the past year, with a market value of $1.6 billion in 2022[1].

Adoption Rates:

• By 2025, 85% of organizations worldwide are expected to embrace the cloud-first principle[2].
• Currently, 94% of companies worldwide are adopting cloud computing[2].

These forecasts indicate a robust and growing demand for cloud computing services across various sectors and regions. The market is driven by factors such as digital transformation initiatives, increasing reliance on data-driven decision-making, and the need for scalable and flexible IT infrastructure.

AMZN Technical Analysis

Price and Moving Averages:

• The current price is $189.08.
• The 50-day moving average (blue line) is at $184.81, which is below the current price, indicating a potential short-term bullish trend.
• The 200-day moving average (red line) is at $161.82, which is well below the current price, indicating a long-term bullish trend.
• The price recently moved above the 50-day moving average, which could signal the beginning of a new upward trend.

Volume:

• The volume shows a significant increase in recent trading sessions, indicating higher investor interest and activity.
• The most recent volume is 72.93 million, which is higher compared to previous days, suggesting strong buying pressure.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI):

• The RSI (14, MA) is at 61.75.
• An RSI above 50 generally indicates bullish momentum. Since it is nearing the overbought territory (above 70), caution might be warranted, but it still suggests upward price movement.

On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV):

• The OBV line is relatively flat but shows a slight upward trend, indicating that volume on up days is somewhat higher than on down days. This supports the possibility of a bullish trend.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More:

• The Stochastic RSI is at 1.000, indicating that the stock is overbought.
• This could suggest a potential pullback or consolidation in the near term.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX):

• The ADX is at 10.93, which is low and indicates a weak trend.
• This suggests that while there might be some upward momentum, the strength of the trend is not yet strong.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More:

• The Chaikin Oscillator is at 58.54M, indicating strong buying pressure.
• This oscillator measures the accumulation and distribution of the stock, supporting the bullish outlook.

Time-Frame Signals:

• 3-Month Horizon: Given the recent breakout above the 50-day moving average and the increased volume, along with bullish indicators such as RSI and Chaikin Oscillator, a “Buy” recommendation is suggested for the short term. However, the overbought Stochastic RSI indicates potential for a pullback, so monitoring for consolidation is important.
• 6-Month Horizon: With the price well above the 200-day moving average and strong buying pressure, a “Buy” recommendation is also warranted for the medium term. The trend indicators show potential for continued upward movement, though the ADX suggests this trend is still developing.
• 12-Month Horizon: For the long term, the strong position above the 200-day moving average and consistent buying pressure support a “Buy” recommendation. The overall trend appears positive, and unless there are significant negative changes in market conditions, this outlook remains favorable.

It is important to watch for any changes in the broader market sentiment and fundamental factors related to Amazon.com Inc. to ensure the technical indicators continue to support these recommendations.

Looking Ahead

Overall, analysts are optimistic about Amazon’s future growth, driven by strong performance in AWS, AI, and e-commerce. Short-term projections indicate significant earnings growth and potential stock price increases, while long-term forecasts suggest sustained growth and substantial gains in stock value. However, analysts also caution about potential volatility due to macroeconomic factors. As Amazon continues to innovate and expand its AI and cloud computing capabilities, it remains well-positioned for future success.

Amazon 2024 Updates FAQ

Citations:
[1] https://research.aimultiple.com/cloud-computing-stats/
[2] https://edgedelta.com/company/blog/how-many-companies-use-cloud-computing-in-2024
[3] https://www.alpha-sense.com/blog/trends/cloud-computing-market-trends/