Executives from Amazon (AMZN, Financial) and Nvidia (NVDA) have affirmed that the development of artificial intelligence data centers remains robust, despite concerns of a potential slowdown due to economic uncertainties. Kevin Miller, Amazon's vice president of global data centers, indicated at a recent conference that the demand for data center construction is not just steady but growing both in the short and long term.
Meanwhile, Nvidia's efforts to supply its H20 chips, specifically tailored for the Chinese market in light of U.S. export regulations, have faced challenges. Major companies like Alibaba (BABA), Tencent (TCEHY), and ByteDance had set a target to receive approximately one million H20 units by the end of May. However, deliveries fell short primarily because of new U.S. restrictions impacting chip exports.
In other news related to AI technology, Google's (GOOGL) existing contract with Lenovo's (LNVGY) Motorola has blocked Perplexity AI from being featured as the default assistant on new devices. This was revealed during Google's ongoing antitrust trial. Although Perplexity's AI application will be included in new Motorola devices, it will not take the default assistant role due to Google's contractual obligations, a situation that both Perplexity and Motorola reportedly wish they could alter.
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 $185.36. 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 $185.355. 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.
