Amazon (AMZN) revenues are set for a huge bounce as a result of its investment in generative artificial intelligence (GenAI), according to a leading analyst.
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Boost To Annual Growth
Five-star TipRanks-rated analyst John Blackledge of TD Cowen estimates that Amazon Web Services’ GenAI revenue of $2.8 billion in 2024 will soar to $7.1 billion in 2025. It will then take another huge leap to $56.3 billion in 2030. Blackledge, who has a Buy rating and $265 price target on AMZN stock, said that GenAI revenue accounted for 2.4% of total revenues in 2024 but will rise to 17.4% in 2030. GenAI, he continued, would add 3.3% to AWS’s annual growth between 2024 and 2030.
Generative AI can create new content and ideas like images, conversations, stories, videos, and music. It can work like an artificial John Lennon or Shakespeare, creating a song or a sonnet, or it can be used by a business to boost product design or chatbots.
Anthropic Investment Will Be Key
Blackledge said GenAI business Anthropic, known for its Claude AI service, will be crucial in Amazon’s future growth. Amazon is a minority investor in Anthropic, with its AWS unit in use as its official cloud provider. He estimates that AWS GenAI revenue from Anthropic could rise to between $7 billion to $17 billion in 2027. This will come from three main revenue streams – API revenues split, Large Language Model (LLM) training costs, and chatbot queries.
There will be plenty of investment going on as well. AWS capex is tipped to rise to $76 billion this year, driven by the GenAI infrastructure buildout. That is more than double the amount spent in 2024.
Is AMZN a Good Stock to Buy?
On TipRanks, AMZN has a Strong Buy consensus based on 47 Buy and 1 Hold rating. Its highest price target is $306. AMZN stock’s consensus price target is $268.91 implying an 20.65% upside.
