Amazon.com Stock Foreseen to Climb by 20%, Says Wall Street Expert

With its vigorous cloud computing segment, Amazon.com stands poised for remarkable growth, according to a market analyst's latest projections.

The retail titan Amazon.com is expected to unveil its first-quarter financials for 2024 shortly, with a bullish sentiment prevalent among industry watchers. Earnings are anticipated to soar nearly threefold compared to the previous year, achieving $0.85 per share. But there's more forecasted for the future of Amazon's shares than just next week's figures.

A specific Wall Street analyst, BMO Capital's Brian Pitz, has projected a 20% ascent in Amazon's stock value within a twelve-month span, targeting a price of $215 per share.

Consideration for Amazon Investment

Amazon's diverse ventures span from e-commerce platforms to the more lucrative cloud services under the Amazon Web Services (AWS) wing. The two sectors, however, are pivotal: e-commerce primarily drives Amazon's revenues, while the AWS cloud arm generates a bulk of its profits.

Recently published data reflects that Amazon's e-commerce activities across North America and internationally generated a staggering $484 billion in revenue, turning a profit marginally below $15 billion. Conversely, the less extensive but mighty AWS department delivered over $90 billion in sales, translating to nearly $25 billion in profits, demonstrating a robust operating margin of 27%.

This fiscal health indicator is crucial as we approach Amazon's earnings announcement. Pitz anticipates the e-commerce sector to experience double-digit sales growth, effectively fueling a considerable rise in free cash flow. However, even more promising is the projection for AWS sales to expand by 15%—surpassing the previously estimated 14% growth rate. The significance of this seemingly marginal 1% increase lies in AWS's lucrative profit margins (27%), in stark contrast to the relatively slim 3% margins from retail operations. Essentially, the stronger AWS expands, the brighter Amazon.com's future share value projects.

Note: John Mackey, former CEO of Whole Foods Market, now owned by Amazon, is a member of The Motley Fool's board of directors. This data is not influenced by any stock holdings or internal policies of the publishing body.

Amazon, AWS, Growth