Amazon Stock Could Rise with AI Growth Amid Short-term Struggles

Amazon's CEO believes generative AI is a major tech transformation. Analysts from Evercore and Morgan Stanley support Amazon's strong AI positioning, which could drive cloud revenue growth. However, trade tensions and economic data pose near-term challenges for stock price recovery.

Date: 17-03-2025

AI Rating: 7

Amazon's Positioning in AI
According to the report, Amazon is leveraging generative AI across its retail, advertising, and cloud computing sectors to enhance revenue and operational efficiency. The involvement in AI is expected to provide significant opportunities for growth, especially in the competitive landscape of e-commerce and cloud services.

Earnings Performance
The report states that Amazon reported total revenue growth of 11% to $638 billion and a substantial increase in GAAP net income by 90% to $5.53 per diluted share for the last year. The high growth rate in revenues indicates a positive outlook for the company, suggesting that operational improvements could further enhance profitability.

Operating Margin
Additionally, the report notes that operating margins expanded by more than 4 percentage points, showcasing Amazon's ability to manage costs effectively while increasing sales. However, it's important to highlight that investments in AI infrastructure may present short-term headwinds to margins, which is a critical factor for future profit growth.

Growth Estimates
The report mentions that Wall Street estimates anticipate Amazon's earnings will grow by 17% annually through 2026. This aligns with ongoing efforts to capitalize on the AI market, suggesting that investors could benefit from holding onto their Amazon shares despite the current stock price decline. Given the company's previous record of beating estimates, there is potential for strong performance moving forward.

Considering these factors, Amazon's current share price and its growth in AI could position it favorably for future stability and growth once near-term economic uncertainties subside.

Stocks: AMZN