Tech giant Amazon (AMZN) recently reported strong third-quarter results that eased investor worries about a potential AI bubble. In fact, Amazon Web Services (AWS) brought in $33 billion in revenue, which was a 20% increase from last year and above the 18% growth that analysts had expected. It was also AWS’ fastest growth since ChatGPT launched in 2022, which reassured investors that Amazon’s heavy spending on AI infrastructure is paying off, according to Bloomberg. As a result, shares are surging at the time of writing.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Notably, CEO Andy Jassy said that Amazon’s AI products are gaining traction across multiple business segments. More precisely, he shared that Rufus—the AI shopping assistant built into Amazon’s retail app—could generate $10 billion in extra annual sales. At the same time, AWS Connect, the company’s cloud-based call center service, is projected to bring in $1 billion yearly, while Bedrock—Amazon’s AI platform for businesses—could eventually match EC2, one of AWS’s top services.
The company also revealed that it’s betting big on Anthropic (PC:ANTPQ), the AI startup behind Claude, with an $8 billion investment and custom-built infrastructure. In addition, Amazon stated that its Trainium2 chips are already “fully subscribed,” which indicates that there is strong demand for them. Jassy also said that Amazon plans to double AWS’ power capacity by 2027.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 40 Buys assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $275.08 per share implies 10.7% upside potential.
