Several Wall Street firms agree: Amazon has the strongest setup among the megacap tech companies heading into earnings season. Will the e-commerce and cloud giant live up to the hype? Roth MKM, Barclays, and Cantor Fitzgerald all doubled down on Amazon, naming it their top pick among the Magnificent Seven tech giants set to report in the coming weeks. Analysts cited Amazon’s steady e-commerce growth, rising advertising profits, cost-cutting efforts, and a booming Amazon Web Service cloud business driven by artificial intelligence as key reasons for their convictions. “We like Amazon most heading into Q4 earnings as growth is steady, margins improving over time, and AI is likely to drive acceleration at AWS,” Barclays wrote in a Jan. 16 preview note. The analysts reiterated their buy-equivalent overweight rating with a $235 price target. They also named Amazon its top megacap idea for 2025. Amazon is set to report earnings after the closing bell on Feb. 6. Roth MKM echoed this bullish sentiment last week, highlighting AWS as the cornerstone of the overall company’s growth trajectory. Analysts raised their price target to $260 from $250 and maintained their buy rating on the stock. Cantor Fitzgerald described Amazon as screening the best among megacap names heading into earnings. Analysts see upside for the fourth quarter that ended in December and looking ahead to fiscal 2025. They cited AWS momentum and margin expansion in retail as key catalysts. Cantor kept its overweight rating and $270 price target. In this week’s tech turmoil on concerns about the more efficient open-source AI model from Chinese startup DeepFake, Amazon shares have held up . That’s in part because the cloud-computing giant has made its platform a welcoming place for a wide variety of AI models, and because it would also benefit from much cheaper AI. Meta Platforms , another winner if AI becomes cheaper to develop and implement, hit all-time highs this week. Meta reports earnings Wednesday evening. We put Microsoft , which also delivers earnings after the bell, in the to-be-determined camp when it comes to how DeepSeek might impact its AI roadmap. The bullish calls come as Amazon builds on a standout 2024. The stock surged 44% last year, outpacing the Nasdaq ‘s near 29% gain and the S & P 500 ‘s more than 23% advance last year. Amazon’s stock gains were fueled by strategic wins across the company’s business segments. In e-commerce, Amazon maintained its dominance — capturing 48% share of the U.S. market in 2024, slightly rising to 49% by the fourth quarter, according to Truist. The company’s “superior delivery speeds” and “strong pricing competitiveness” also helped it incrementally gain market share in the essentials category, encouraging shoppers to skip local stores for Amazon’s quick and affordable convenience . Also on the retail front, Amazon achieved record delivery speeds while slashing per-unit delivery costs and boosting margins. Its advertising business also emerged as a key profit driver, showcasing the company’s ability to leverage its platform for high-margin opportunities. AWS continued to thrive, driven by advancements in custom silicon chips and cutting-edge AI services. These innovations helped AWS solidify its No. 1 position in the cloud and reinforced its role as a profit engine for Amazon. Microsoft’s Azure and Alphabet ‘s Google Cloud are No. 2 and 3, respectively. AMZN 1Y mountain AMZN 1-year stock performance. All of this success comes as Amazon invests heavily in the future. From its nascent satellite business , Project Kuiper, to bolstering its AWS infrastructure to betting big on AI, Amazon is laying the groundwork for long-term growth while remaining a Wall Street favorite. This week’s DeepSeek worries, which slammed Club chipmakers Nvidia and Broadcom , are not a matter of concern for Amazon, according to Oppenheimer. In a Monday note, the analysts said Amazon has been ahead of the curve, anticipating that AI tools and hardware would become more affordable and widely available. “This shift is great news for companies wanting AI to cut costs,” Oppenheimer said, adding that Amazon plans to offer lower-cost models and infrastructure to shake up specific parts of the market. “Amazon has already prepared its platform to take advantage of these changes.” Amazon seems to be “doing everything you could ask for with search and ads and entertainment and Amazon Web Services,” Jim Cramer said during the Club’s January Monthly Meeting , which was held last Thursday. Bullish on the new generative AI-powered Alexa, Jim said it “could be the ultimate assistant.” He added that Alexa was “supposed to be so much smarter and precise and knowledgeable and understanding that I think the device will become the key to a whole new Amazon ecosystem.” To be sure, Bank of America is concerned about the potential impact of new tariffs, particularly on goods sourced from China. Analysts estimate that 35% of Amazon’s first-party goods and 40% of its third-party goods come from China and new tariffs could weigh on prices, potentially making products more expensive for shoppers. The bank is also concerned about elevated expectations for AWS and potential pressure on cloud margins. (Jim Cramer’s Charitable Trust is long AMZN, GOOGL, META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
FILE PHOTO: The Amazon.com logo and stock price information is seen on screens at the Nasdaq Market Site in New York City, New York, U.S., September 4, 2018.
Mike Segar | Reuters
Several Wall Street firms agree: Amazon has the strongest setup among the megacap tech companies heading into earnings season. Will the e-commerce and cloud giant live up to the hype?