Recent statements from Amazon (AMZN, Financial) and Nvidia (NVDA) executives have reinforced their commitment to expanding artificial intelligence (AI) data centers, despite looming economic uncertainties. Concerns over a potential recession have led some investors to speculate about possible cutbacks in tech infrastructure investments. However, both companies have dispelled these worries, emphasizing a steady trajectory in their expansion plans.
Kevin Miller, Amazon's vice president of global data centers, assured investors at a recent conference that there has been no notable slowdown in their data center projects. He highlighted that Amazon continues to witness robust demand for AI infrastructure, and anticipates this demand will persist both in the near future and over the long term. This steady growth outlook aligns with the tech giant's broader strategy to continue scaling its capabilities to meet increasing customer needs.
The continued investment in AI data centers underscores Amazon's confidence in the sustained growth of AI technology, a belief shared by Nvidia executives. Both companies are poised to capitalize on the anticipated rise in AI applications across various sectors, underscoring their roles as key players in the tech industry's evolution.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 67 analysts, the average target price for Amazon.com Inc (AMZN, Financial) is $248.17 with a high estimate of $295.46 and a low estimate of $195.00. The average target implies an upside of 33.89% from the current price of $185.35. More detailed estimate data can be found on the Amazon.com Inc (AMZN) Forecast page.
Based on the consensus recommendation from 73 brokerage firms, Amazon.com Inc's (AMZN, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Amazon.com Inc (AMZN, Financial) in one year is $183.63, suggesting a downside of 0.93% from the current price of $185.35. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Amazon.com Inc (AMZN) Summary page.
AMZN Key Business Developments
Release Date: February 06, 2025
- Revenue: $187.8 billion, up 10% year-over-year.
- Operating Income: $21.2 billion, up 61% year-over-year.
- Free Cash Flow: $36.2 billion, up $700 million year-over-year.
- North America Revenue Growth: 10% year-over-year.
- International Revenue Growth: 9% year-over-year, excluding foreign exchange impact.
- Advertising Revenue: $17.3 billion, up 18% year-over-year.
- AWS Revenue: $28.8 billion, up 19% year-over-year.
- North America Operating Margin: 8%, up 190 basis points year-over-year.
- International Operating Margin: 3%, up 400 basis points year-over-year.
- AWS Operating Income: $10.6 billion, up $3.5 billion year-over-year.
- Capital Investments: $26.3 billion in the fourth quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amazon.com Inc (AMZN, Financial) reported a 10% year-over-year increase in revenue, reaching $187.8 billion, despite foreign exchange headwinds.
- Operating income rose by 61% year-over-year to $21.2 billion, marking the largest operating income quarter ever for the company.
- Amazon's advertising revenue grew 18% year-over-year, reaching $17.3 billion, indicating strong growth in this segment.
- AWS achieved a 19% year-over-year growth, with an annualized revenue run rate of $115 billion, showcasing its continued expansion.
- The company has successfully reduced its global cost to serve on a per unit basis for the second consecutive year, while increasing delivery speed and improving safety.
Negative Points
- Foreign exchange rates posed a $900 million headwind in the quarter, impacting revenue growth.
- AWS growth is currently moderated by supply chain constraints, including chip shortages and power limitations.
- The company anticipates a decrease in full-year 2025 operating income by approximately $400 million due to changes in the useful life of certain assets.
- Amazon is facing increased competition in the AI space, with the need to invest heavily in AI infrastructure impacting short-term margins.
- The company is experiencing fluctuations in AWS operating margins, which have varied significantly over the past two years.
