Amazon's Mixed Q1 Guidance Drives Stock Movement
In pre-market trading on Friday, Amazon (AMZN) stock dipped 3% to $231.80 per share. This followed the tech giant's release of mixed first-quarter guidance and plans for significant AI infrastructure spending in 2025.
Factors Influencing Share Price
* Currency Fluctuations: Amazon anticipates a $2.1 billion hit to revenue due to foreign-exchange variations, missing analysts' forecasted $158 billion revenue.
* Capex Guidance: Similar to Microsoft (MSFT) and Meta (META), Amazon announced substantial capex spending, with $104 billion allocated for this year, exceeding analyst estimates of $80-$85 billion.
Analyst Insights
Despite the guidance, analysts remain bullish on Amazon for several reasons:
* AWS Sales Reacceleration: Pivotal Research anticipates a sales resurgence in the key Amazon Web Services (AWS) cloud business in the latter half of 2025 due to the aggressive capex spending.
* Strong Quarterly Performance: Amazon reported three consecutive quarters of 19% AWS sales growth, a 46.9% AWS operating profit margin, and accelerated sales growth at physical stores.
Wall Street Recommendations
Several analysts have maintained or revised their positive ratings on Amazon:
* Pivotal Research: Buy, $260 price target
* DA Davidson: Buy, $280 price target (increased from $235)
* JP Morgan: Overweight, $270 price target
* Wedbush: Outperform, $280 price target
Catalysts for Future Growth
Analysts identify potential catalysts for Amazon's continued growth, including:
* Growing AI contributions to AWS growth
* Cost-saving improvements driven by automation and robotics
* Commercialization of AI capabilities in Alexa
* Monetization of Project Kuiper
* Expected increase in Prime Subscription prices