Amazon Is Becoming A 'Gen AI And Media Business': 6 Analysts Break Down Q3 Earnings

Shares of Amazon.com, Inc. AMZN continued to climb in early trading Friday after the company reported stellar third-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from Amazon's quarterly print. 

Telsey Advisory Group On Amazon

Analyst Joseph Feldman maintained an Outperform rating and raised the price target from $160 to $165.

Amazon reported strong results for the third quarter and provided solid guidance for the fourth, Feldman said. “On the retail side, we are encouraged to see double-digit sales growth in the U.S. and international, as well as a sequential improvement in profitability,” the analyst wrote.

“At AWS, we are encouraged to see the business stabilize as customers start to shift toward a focus on new technologies, especially generative AI, away from cost optimization,” he added.

Goldman Sachs On Amazon

Analyst Eric Sheridan reiterated a Buy rating and $190 price target. 

Amazon delivered a beat across the board, “as the momentum of its global eCommerce business, a rising North America operating income margin and continued stabilization of AWS reported revenue growth were all solid sources of upside in Q3,” Sheridan said in a note.

Management is creating the path ahead for AWS revenue recovery across three thematic elements, he said: “attenuating cloud optimizations, resumed company cloud migration activity compared to a pause in the last 18 months & net new AI workloads.” 

Needham On Amazon

Analyst Laura Martin reaffirmed a Buy rating and $160 price target. 

Amazon is generating higher profitability while investing in GenAI “to enhance its strategic position,” Martin said.

Management commentary centered on AWS and GenAI, rather than the company’s core ecommerce business, the analyst stated. “AMZN is becoming a GenAI and Media business, which should drive multiple expansion,” she said. 

Check out other analyst stock ratings.

Oppenheimer On Amazon

Analyst Jason Helfstein maintained an Outperform rating and $170 price target.

“AWS seems past worst of optimizations and realignment of fulfillment driving improved Ecommerce margins,” Helfstein said.

He named the company as the top large-cap pick for 2024 and said that advertising accelerated in third quarter and AWS margins are benefiting from headcount reductions and slowing opex.

“CEO Jassy repeatedly cited clients' cloud optimizations are 'attenuating,' and customers are increasingly looking toward new initiatives, citing deal momentum building,” the analyst said. 

Morgan Stanley On Amazon

Analyst Brian Nowak reiterated an Overweight rating and $175 price target. 

“Retail profitability is inflecting while AWS growth seems to have bottomed and set to accelerate in coming quarters,” Nowak wrote in a note. “AMZN’s company-wide AI product suite also continues to grow,” the analyst said. 

"Management also detailed its triple-pronged AWS AI strategy across the compute, LLMs and application layers… which we believe will lead to structurally faster long-term AWS growth." 

William Blair On Amazon

Analyst Dylan Carden reaffirmed an Outperform rating on the stock.

“Amazon handily beat sales and earnings expectations for the third quarter, with double-digit upside across all three primary business segments and substantial improvement in operating income growth,” Carden said in a note.

“On AWS, growth came in at around 12%, slightly below consensus, but up 4% sequentially,” the analyst added. “Most notably, third-quarter operating income of $11 billion was 46% above the Street’s expectations of $8 billion and exceeded the prior guidance range of $5.5 billion to $8.5 billion,” he further stated.

AMZN Price Action: Shares of Amazon were trading 8.05% higher at $129.19 Friday morning. 

Related Link: Amazon CEO's Cost-Cutting Strategy Boosts Profit Margins To Near-Record Highs

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