Amazon Stock Wobbles on Mixed Earnings and Hefty Capital Spending
Foreign exchange fluctuations and significant capital expenditure guidance have impacted Amazon (AMZN) shares. In premarket trading on Friday, the tech giant's stock declined by 3% to $231.80.
Mixed Guidance and Massive Spending
Amazon's first-quarter guidance fell short of analysts' estimates, with revenue projected between $151 billion and $155 billion. This shortfall is attributed to a $2.1 billion hit from currency fluctuations. Similar to Microsoft and Meta, Amazon revealed a substantial capital spending plan of $104 billion for 2025, exceeding analysts' forecasts of $80-$85 billion.
Bullish Outlook Despite Guidance
Analysts remain bullish on Amazon due to expected sales growth in Amazon Web Services (AWS) later this year and the company's aggressive spending on AI infrastructure.
AWS Performance Highlights
* Three consecutive quarters of 19% sales growth
* Operating profit margin of 46.9%, up from 29.6% a year ago
* Accelerated sales growth in physical stores
Wall Street Insights
Pivotal Research
* Rating: Buy
* Price Target: $260
* Cites Amazon's strong moat, organic revenue growth opportunities in AWS, and potential for operating margin expansion driven by AI adoption and scale.
DA Davidson
* Rating: Buy
* Price Target: $280
* Believes AWS is healthy and well-positioned among hyperscalers, particularly in AI-related services.
JPMorgan
* Rating: Overweight
* Price Target: $270
* Views Amazon's focus on Generative AI as a significant opportunity and believes the infrastructure investment will support AWS's growth trajectory.
Wedbush
* Rating: Outperform
* Price Target: $280
* Highlights potential catalysts such as AI contributions to AWS growth, automation, monetization of Project Kuiper, and Prime subscription price increases.