Amazon (NASDAQ: AMZN) has made waves on Wall Street with an impressive earnings report.
The e-commerce and cloud computing leader announced robust growth in its third-quarter earnings. Revenue increased by 11% to $158.9 million, demonstrating the company’s continued dominance in e-commerce. Additionally, Amazon Web Services (AWS), which is its cloud computing arm, saw a resurgence in revenue growth after a prior slowdown due to economic uncertainty.
Following this news, the stock rose by 6% on Friday, prompting analysts to adjust their price targets upward, indicating confidence in further growth over the next year.
Image source: Amazon.
Could Amazon’s Stock Reach $270?
Truist recently raised its price target for Amazon to $270, suggesting more than a 35% increase from its current price, along with a maintained buy rating.
The firm highlighted Amazon’s international growth and improving margins in both North America and AWS. Notably, the international segment, which previously reported a $95 million loss, turned around to show a $1.3 billion profit. Overall operating income surged from $11.2 billion to $17.4 billion as Amazon’s high-margin operations expand.
Is Amazon Worth the Investment?
Amazon is significantly increasing its capital expenditures on AWS to anticipate growing demand from artificial intelligence. The company plans to invest $75 billion in capital expenditures this year and potentially more next year, which will surpass its net income for both years.
Leading the cloud infrastructure sector requires substantial investment, especially with rising demand for AI technology. Amazon’s strong network of competitive advantages supports its profit growth, stemming from its resilient high-margin sectors, allowing it to sustain such investments.
Long-term investors may find Amazon a worthwhile buy, even if reaching $270 within a year could be ambitious.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Truist Financial. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
