Amazon (AMZN) Stock Forecast & Price Target

Amazon.com demonstrates a strong financial outlook driven by various segments, particularly its AWS division, which reported a 19% year-over-year revenue increase to $28.8 billion in 4Q24, accompanied by a significant operational margin expansion of 730 basis points to 37%. The company's operating margins have improved across different segments, with general operating margins rising to 11.3% due to leveraging generative AI, alongside its advertising revenue achieving a $69 billion annual run rate with substantial growth potential. Additionally, Amazon has enhanced efficiency in its fulfillment network, which has led to increased order availability, while customer engagement metrics such as a 65% year-over-year rise in Prime memberships further underscore the company's robust growth trajectory.

The financial outlook for Amazon.com is negatively impacted by revised projections, with FY25 revenue estimates lowered to $699.4 billion and EPS expectations at $6.10, both reflecting a 1% decrease from previous forecasts despite a year-over-year growth of 10%. Stagnation in product sales, which have remained between $61 billion and $67 billion in three quarters post-1Q21, raises concerns about Amazon's growth potential outside of the peak fourth quarter. Additionally, the company faces pressures from foreign exchange fluctuations and changes in accounting estimates, alongside a significant disparity in operating income contributions between services and product sales, reflecting the challenges ahead for sustaining its valuation in a potentially faltering economy.