Amazon likely to see AI benefits, EBITDA upside, Jefferies says
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Amazon (NASDAQ:AMZN) shares have gained more than 40% year-to-date, but the stock could see further upside as the company's profitability improves and it continues to benefit from artificial intelligence, investment firm Jefferies said on Wednesday.
Analyst John Colantuoni, who has a buy rating on Amazon (AMZN), noted the tech giant is a "core beneficiary" from the rise of AI due in large part to its cloud computing unit, Amazon Web Services.
"While AMZN lags its mega-cap peers in generative AI capabilities today, the AI opportunity remains early, and we expect AMZN's rich history of innovation will help them close the AI gap over time," Colantuoni wrote in an investor note.
Colantuoni raised his per-share price target on Amazon to $150 from $135.
In addition, Colantuoni noted that operating margins are expected to rise in 2023 to 3.9%, up from 2.4%, as the company continues to improve profitability, something the analyst expects will lead to estimate revisions through 2024.
Colantuoni also said that growth for AWS is likely to re-accelerate in the fourth-quarter as customer's budget constraints and cloud optimization headwinds fade.
Amazon (AMZN) shares were fractionally higher in pre-market trading on Wednesday.
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