Amazon May Catch Up on the AI Stock Surge, Analysts Say

Dow Jones2023-05-26

The surge in Nvidia's stock price this week on the back of optimism about artificial intelligence is spreading to other shares, such as Advanced Micro Devices (ticker: AMD) and Taiwan Semiconductor $(TSM)$.

Amazon $(AMZN)$, whose cloud computing unit is the biggest single provider of such services, has been left out. That's partly down to concern that companies might currently be trying to scale back their cloud usage, and that other companies such as Microsoft $(MSFT)$ and Google-parent Alphabet $(GOOGL)$ might benefit more from advances in Nvidia's $(NVDA)$ AI chips.

However, Amazon still stands to get a significant boost from AI in the future, analysts led by Mark Mahaney at Evercore ISI wrote in a note on Thursday.

They argue that Amazon is now trading at a low earnings multiple, but that its margins and growth could start rising sharply again in the second half of the year. The rising demand for AI indicated in Nvidia's outlook will benefit Amazon Web Services as it gives companies additional computing power.

Evercore has an Outperform rating on Amazon's stock with a price target of $150.

Amazon shares climbed 2.7% in morning trading Friday to $118.1.

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Sunshinekim
2023-05-29
Sunshinekim
Yay! Im banking on it.

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