Amazon: Giant Between Growth and Forecasts

Scotiabank analyst Nat Schindler has initiated his analysis of Amazon, rating the company as "Sector Outperform" with a price target of $245 per share. Schindler highlights Amazon's dominant position in various areas, notably Amazon Web Services (AWS), where revenue growth is expected to exceed market expectations beyond 2025. The AI division of AWS is already showing high demand and has the potential for significant growth. With flexible, cost-efficient AI solutions, AWS positions itself as a central partner for companies leveraging AI. Schindler forecasts long-term revenue growth of about 15% for AWS, with operating margins exceeding 30% beyond 2025. In Amazon's retail segment, continuous growth of 5% to 10% is expected, despite lower margins. Catalysts such as health and grocery services could further boost retail figures. An increase in operating income is predicted in the next 2 to 4 years, supported by macroeconomic tailwinds and cost optimizations. JP Morgan analyst Doug Anmuth confirms that Amazon remains his top pick. Strong AWS growth figures and disciplined operational management motivate this assessment. Anmuth anticipates an operating income of $16 billion in Q4 and $70 billion in 2025. AWS growth is expected to be driven by more than 20%, facilitated by optimizations, workload migrations, and AI monetization. Improved warehousing and logistics are expected to boost margins in North America. In addition, a free cash flow of $58 billion in 2024 and $72 billion in 2025 is anticipated. Investors are speculating on a net sales figure for the third quarter ranging from $157 to $158.5 billion, with AWS growth between 20% and 21% and an operating income of $14 to over $15 billion.