JPMorgan’s (JPM) five-star analyst Doug Anmuth has reaffirmed his Overweight rating on e-commerce giant Amazon’s (AMZN) shares, dismissing the recent post-earnings selloff in the retailer’s stock.
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Amazon Stock Falls Below November High
According to Anmuth, Amazon shares are currently trading at levels last seen before it released its recent third-quarter earnings results. Amazon’s recent results surpassed Wall Street’s estimates, fueled by sales growth in its cloud services. However, AMZN is 10% off its November high, the analyst noted.
AMZN stock had jumped by approximately 10% to $244.22 per share on October 31, following the release of the earnings results. However, as of 8:33 a.m. EST on Wednesday, the stock changed hands for about $231 per share.
What’s Behind the Pullback in Amazon Stock?
Anmuth blamed the pullback on several factors, including Amazon’s recent return to the U.S. bond market after a three-year hiatus to raise $15 billion. The proceeds are reportedly meant to service the e-commerce company’s debt and for acquisition and investment, among others. The analyst contended that the fundraising effort is “not a big deal.”
Other factors suggested by the analyst include the recent deal signed by AI startup Anthropic AI — which is backed by Amazon — to purchase $30 billion of Microsoft’s (MSFT) Azure cloud services in exchange for a $15 billion joint investment from the tech major and top chipmaker Nvidia (NVDA).
Anmuth also pointed to concerns about the timing of the release of Amazon’s new Trainium 3 AI chips. According to some industry estimates, these chips will offer double the computing power and energy efficiency of Amazon’s previous versions.
Despite these concerns, the JPMorgan analyst believes that Amazon’s cloud offering, Amazon Web Services, will continue to see accelerated growth into next year. Anmuth, therefore, named AMZN his top pick and reiterated his $305 price target, which implies almost 33% upside from the current levels.
This week, the analyst also named Amazon’s shares as the “best idea” heading into the Cyber 5 weekend that kicks off with Thanksgiving Day on November 27th.
Is Amazon a Buy, Hold, or Sell?
Across Wall Street, analysts remain upbeat about Amazon’s shares and have a Strong Buy consensus rating on the stock. This is based on 41 Buys and two Holds issued by analysts over the past three months. Moreover, at $294.97, the average AMZN price target implies over 28% upside potential.
