Amazon Stock: Analysts Citing Fundamental Factors for Bullish Case
The global economy has been beset by significant uncertainty in 2025, resulting in substantial market volatility and sell-offs, particularly among major tech stocks. Amazon (AMZN), one of the so-called “Magnificent 7” stocks, has underperformed, losing 14.4% year-to-date. However, according to analyst forecasts and reports, the company’s strong fundamentals make it an attractive investment opportunity.
According to an analysis by TipRanks, Amazon’s projected performance is robust, with several Wall Street analysts reiterating their Buy ratings on the stock. Bank of America, Monness, and Oppenheimer have all expressed confidence in AMZN’s prospects, citing a combination of fundamental factors that support a bullish case.
“Amazon is a behemoth that can navigate tough times without breaking a sweat,” the TipRanks analysis states. “It may suffer a few blows, but nobody in their right mind would forget how integral it is in today’s world, primarily because of its cloud services business.”
Amazon’s dominance in the e-commerce and cloud computing markets is a significant factor in its favour. With a market cap of $2 trillion, Amazon is the most valuable e-commerce company globally, dwarfing its Chinese competitor Alibaba (BABA). Its cloud business, Amazon Web Services (AWS), leads the global cloud computing market, which was valued at $752 billion in 2024, according to estimates from Grand View Research.
As of Q4 2024, AWS commands a market share of 30%, while Microsoft’s (MSFT) Azure and Alphabet’s (GOOG) Google Cloud Platform hold shares of 21% and 12%, respectively. In the streaming business, Amazon is taking share from Netflix (NFLX), with over 200 million customers as of 2024.
TipRanks analyst notes that AMZN’s cloud business is also one of its most profitable businesses, generating $10.6 billion in operating income in Q4 2024 on revenue of $28.8 billion. This gives it an operating margin of 37%, and margins are expected to improve as Amazon reduces its reliance on Nvidia’s (NVDA) chips and offers better price performance with its custom silicon Trainium2.
Despite near-term headwinds, including tariffs imposed by the Trump Administration, which may put pressure on Amazon’s e-commerce business, the company’s long-term thesis remains intact. Amazon is a market dominator, and its position across e-commerce, cloud, and streaming has set it up for multi-year success.
AWS is Amazon’s key growth engine, and with its proprietary silicon, we may see margin expansion here. While the stock may experience volatility in the near term, disciplined investors can find opportunities to build a position in one of the most dominant and diversified businesses in the world.
In terms of valuation, AMZN stock is trading at a forward P/E of 30x, which is 83% cheaper than its 5-year historical average forward P/E. Wall Street analysts expect earnings to grow by about 13% in 2025.
On Wall Street, AMZN stock carries a Strong Buy consensus rating based on 46 Buy, one Hold, and zero Sell ratings over the past three months. AMZN’s average price target of $245.77 implies approximately 31% upside potential over the next twelve months.
Just yesterday, Bank of America analyst Justin Post maintained a Buy rating and his $225 price target on AMZN stock. Post noted that Amazon’s consumer-oriented business has remained strong amid tariffs, and demand for the company’s AI-related products remains robust.
In conclusion, Amazon’s strong fundamentals, dominant position in the market, and growth potential make it an attractive investment opportunity. While near-term uncertainty and volatility may persist, disciplined investors can consider building a position in this market leader.
Amazon’s upcoming earnings release is expected to report Q1 2025 earnings on May 1. According to TipRanks, Amazon forecasts revenue of $151-$155.5 billion and operating income of $14-$18 billion. However, due to the tariffs announced, businesses and consumers have become cautious with spending, likely leading to Amazon’s performance suffering.
The stock’s long-term strengths outweigh its short-term weaknesses, and its superb track record, including outstanding fundamentals, is likely to support the company’s recovery once macroeconomic angst dissipates.
For more information and analyst ratings, please refer to TipRanks.
Source link
