$Tiger Brokers(TIGR)$ $Amazon.com(AMZN)$
BofA Believes Amazon Ad Revenue Could Contribute 5 Points to Long-Term Margins (PT: $210)
"We estimate advertising contributes over 4 % points to $AMZN's retail margins today and could grow toward 5 points by 2026,"
Key points from their analysis:
— Ad Revenue Growth: $AMZN's advertising revenues continue to grow faster than GMV and have become a key driver of retail profitability. They expect these trends to continue, supported by ramping Prime Video ads and AI integration.
— Prime Video Ads: The ramp-up of Prime Video ads could drive the most incremental growth. BofA estimates Prime Video ads could reach nearly $5 billion in sales by 2025, with further room for growth in 2026 as ad loads increase.
— 3P Ad Partnerships: Third-party ad partnerships could contribute modest revenues and additional GMV.
— Operating Profit Upside: BofA sees advertising strength, retail efficiencies, and AWS acceleration driving Amazon's operating profit upside in 2024.
— Long-Term Retail Margins: Analysts believe that growing visibility for Amazon advertising, aided by the Prime Video ad ramp, could drive greater confidence in achieving 10% or more long-term retail margins.
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