Amazon (AMZN) Stock Forecast & Price Target

Amazon's robust performance in the fourth quarter of 2024 underscores a positive financial outlook, highlighted by AWS revenues rising 19% year-over-year to $28.8 billion, with operating income experiencing a notable 48% increase and an impressive operating margin expansion of 730 basis points to 37%. Additionally, Prime memberships surged over 65% year-over-year, alongside a significant enhancement in fulfillment capabilities, indicating potential for continued revenue growth. The advertising segment, now on a $69 billion annual run rate, has shown a stable increase of 18% year-over-year, contributing to a high estimated margin, illustrating Amazon's ability to capitalize on diverse revenue streams and operational efficiencies.

Amazon.com’s financial outlook reflects significant concerns due to a lowered FY25 revenue estimate of $699.4 billion, which represents only a 10% year-over-year growth and is a 1% reduction from previous estimates. Furthermore, the stagnation of product sales between $61 billion and $67 billion in three out of four quarters since 1Q21 suggests a troubling plateau in revenue generation, which poses risks if economic conditions worsen. Additionally, adjustments like the reduction in the useful life of servers are expected to decrease FY25 operating income by around $700 million, raising further doubts about the company's profitability trajectory.