BofA Trims Amazon.com (AMZN) Target but Sees Upside from AWS and Advertising

Amazon.com, Inc. (NASDAQ:AMZN) is one of the Buzzing AI Stocks on Wall Street. On January 27, BofA Securities analyst Justin Post lowered the price target on the stock to $286.00 (from $303.00) while maintaining a “Buy” rating. The price target cut comes ahead of the company’s February 5 earnings report.

BofA expects Amazon to report fourth-quarter revenue of $213 billion and operating income of $26.0 billion, ahead of the Street consensus of $211 billion and $24.6 billion, respectively. It believes investor expectations are around $212.5 billion for revenue and $26.0 billion for operating income.

The firm anticipates 22% year-over-year growth for Amazon Web Services (AWS), topping the Street’s 21% estimate and accelerating from 20% in the third quarter. This improvement is driven by increased capacity driving incremental sales, noting how recent management commentary indicated demand still outstrips capacity, which it views as supportive for pricing.

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In North American retail, it anticipates results slightly ahead of Street projections, which currently calls for growth to decelerate 1 percentage point to 10% year-over-year. Analysis of aggregated debit and credit points to steady online spending trends.

BofA sees potential upside to Street estimates in North American, where margins are expected to expand by an estimated 50 basis points year-over-year. This expansion is driven by factors such as solid advertising trends, lower fuel costs, and ongoing inbound process improvements. It also added how first-quarter margins should benefit from layoffs implemented in the fourth quarter.

Amazon.com Inc. (AMZN) is an American technology company offering e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.

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