Amazon’s first-quarter earnings significantly exceeded expectations, driven by strong performance in both its core retail business and Amazon Web Services (AWS). Analysts are responding positively, raising price targets and citing the company’s leading position in the burgeoning AI market as a key growth driver. This strong performance has fueled optimism on Wall Street, suggesting a continued upward trajectory for the stock.
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Amazon's Q1 Blowout Fuels Wall Street Optimism: Is This Just the Beginning?
Amazon.com delivered impressive earnings results on Wednesday, and Wall Street analysts are increasingly confident that this is just the start of a sustained period of strong performance for the tech giant.
The company reported revenue of $181.52 billion for the first quarter, exceeding analyst expectations of $177.3 billion (as polled by LSEG). Earnings per share came in at $2.78, significantly surpassing the Street's consensus estimate of $1.64. Amazon Web Services (AWS) also showed strong growth, accelerating to 28% year-over-year, driven by core workload shifts and the increasing adoption of its Trainium chip amid rising demand for artificial intelligence.
Amazon has raised its second-quarter revenue forecast to between $194 billion and $199 billion. While shares initially jumped over 4% on Thursday before retracing some gains, analysts remain bullish.
Analyst Reactions:
- Barclays (Ross Sandler): "AMZN is adding the most AI capacity of any company over the next few years, and as the coming wave of Agentic AI products take form, all roads lead to AWS." Barclays raised its price target to $330 from $300, suggesting a 25% upside.
- Citi (Jake Hallac): Maintains a buy rating with a $285 price target (8% above Wednesday’s closing price), citing AWS’ accelerating growth, improved capacity visibility, and expanding backlog.
- Morgan Stanley (Brian Nowak): Raised AWS estimates and now models 35%/36% year-over-year growth, with a $330 price target (25% upside).
- Bernstein (Mark Shmulik): Outperform rating with a $315 price target (20% upside), noting the positive shift in market sentiment and revenue guidance approaching $200 billion.
- Bank of America (Justin Post): Buy rating with a $310 price target (18% upside), highlighting the positive implications of AWS upside without increased capital expenditure guidance.
- Mizuho (Lloyd Walmsley): Outperform rating with a $325 price target (24% upside), emphasizing strong results across the board and a growing AWS backlog.
- Canaccord (Maria Ripps): Buy rating with a $330 price target (25% upside), pointing to AWS’ vertically integrated stack winning AI workloads.
The broader hyperscaler market is also investing heavily in AI, with Alphabet, Microsoft, Meta, and Amazon collectively expected to spend $700 billion this year on AI build-outs.
