The share price of e-commerce and cloud computing giant Amazon.com has been under pressure recently, with a year-to-date gain of only about 6% and a retreat of approximately 10% from its all-time high. The market is now focused on whether the second-quarter earnings report, scheduled for release after the market closes on July 30, can serve as a catalyst for a stock rebound.
Despite the stock's weakness, Wall Street remains broadly optimistic. Amazon holds a consensus analyst rating of "Strong Buy," with an average price target around $319, implying roughly 30% upside potential. Goldman Sachs analyst Eric Sheridan raised his price target from $225 to $335, reiterating a Buy rating. He views growth in the AWS cloud business, dominance in e-commerce, and advertising revenue as core long-term growth drivers.
Institutions are particularly focused on AWS performance. BNP Paribas expects second-quarter AWS revenue to grow 33% to 35%, exceeding the market's general expectation of around 31%. This is primarily driven by robust underlying demand and the expansion of partnerships with entities like OpenAI and Anthropic. AWS's order backlog is projected to reach approximately $485 billion, with Anthropic's ten-year, $100 billion agreement being a significant contributing factor.
However, the market retains some concerns regarding Amazon's massive capital expenditures. The company previously announced that capital expenditures will reach $200 billion by 2026, primarily for AI infrastructure. KeyBanc analysts anticipate capital expenditures of $331 billion and $356 billion for 2027 and 2028, respectively, significantly higher than Wall Street's expectations. Despite the substantial spending, analysts believe sustained growth in AI computing demand provides a foundation for these investments.
Second-quarter market expectations are: earnings per share of $1.82 and revenue of approximately $196 billion, representing year-over-year growth of about 17%. KeyBanc raised its price target from $330 to $335, stating that Amazon remains its top pick in e-commerce, citing strong retail trends and AWS being in an upward cycle. The general market view is that if earnings exceed expectations, it could potentially drive the stock price back towards recent highs.
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