Last Update 01 Nov 25

Fair value Increased 7.88%

Amazon.com's analyst price target has been revised upward by nearly $21 to reflect increased conviction among analysts that improving revenue growth and expanding profit margins, driven by a strong AWS acceleration and resilient retail performance, justify a higher valuation.

Analyst Commentary

Recent analyst commentaries reflect a generally optimistic stance on Amazon.com, with multiple firms revising price targets upward and highlighting key drivers of anticipated growth, while also noting areas that merit continued attention for investors.

Bullish Takeaways

Bullish analysts are raising price targets, citing stronger performance in AWS and resilient retail results, both of which signal improved convictions around Amazon's earnings trajectory and premium valuation potential.
The acceleration in AWS revenue, particularly when outperforming market expectations, stands out as a primary catalyst for share price appreciation and future margin expansion.
Growth across Amazon's diverse businesses, including advertising, retail, and cloud, is seen as robust, suggesting the company is well positioned to capitalize on multiple high-value verticals simultaneously.
Expansion into segments such as grocery and same-day delivery is expected to deepen customer engagement and reinforce the stickiness of the Prime ecosystem, supporting further share gains and pricing power.

Bearish Takeaways

Bearish analysts caution that Amazon's continued expansion into grocery, while promising, brings operational complexity and thinner margins, presenting risks to near-term profitability as the segment scales.
Concerns remain around the highly competitive grocery market, where established peers and local players require Amazon to differentiate on value, convenience, and service to maintain momentum.
Some analysts note that benefits to industry-wide retail sales from government programs are under pressure, and disruptions in consumer confidence could impact certain categories, including staples and groceries.
The company's ongoing investments, while supporting long-term growth, could lead to dilution in operating income if execution lags expectations, particularly in newer or lower-margin categories.

What's in the News

Amazon opens Project Rainier, an $11 billion AI data center in Indiana. The center trains and runs Anthropic's AI models using over 500,000 Amazon Trainium 2 chips, marking a major infrastructure investment in artificial intelligence. (CNBC)
As part of a significant restructuring, Amazon announces plans to cut as many as 30,000 corporate jobs. This represents nearly 10% of its corporate workforce and is the largest layoff round since 2022. (Reuters)
Amazon is "gutting" its video game division and reducing work on big-budget games, including MMOs like "New World." The majority of layoffs are affecting offices in Irvine and San Diego. (Bloomberg)
A federal judge finds the Trump administration's temporary suspension of SNAP food aid likely unlawful. This development impacts major grocery retailers including Whole Foods (Amazon), Walmart, and others. (Bloomberg)
Amazon launches Project Rainier and continues to accelerate its cloud and AI business, supporting growth for Amazon Web Services amid recent optimistic analyst coverage. (CNBC)

Valuation Changes

Fair Value Estimate has increased from $266.56 to $287.57, reflecting higher analyst confidence in Amazon.com's outlook.
Discount Rate has decreased marginally from 8.34% to 8.33%, indicating slightly lowered perceived risk in future earnings streams.
Revenue Growth projections have risen from 10.70% to 11.27%, pointing to stronger sales expectations.
Net Profit Margin estimates have improved from 12.32% to 12.78%, suggesting anticipated gains in operational efficiency.
Future P/E Ratio has edged up from 33.67x to 33.71x, indicating a slight increase in expected valuation multiples.

AWS's leadership in cloud and AI, along with deep integration and enterprise relationships, positions Amazon for strong high-margin growth as digital adoption accelerates.
Enhanced logistics automation, international expansion, and a growing Prime ecosystem drive structural cost efficiency, improved margins, and sustained revenue growth.
Competitive, regulatory, and cost pressures across AWS and core retail risk squeezing margins and hindering Amazon's ability to sustain profitable, consistent long-term growth.

Catalysts

About Amazon.com

Engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally.What are the underlying business or industry changes driving this perspective?

Massive and still early-stage shift of global IT spend from on-premises to cloud, with management noting that 85–90% of worldwide IT expenditure remains outside the cloud and that this dynamic is poised to reverse over the next 10–15 years; AWS's broad functionality, leading security, and existing enterprise relationships position it to capture significant high-margin revenue growth as cloud and AI adoption accelerate.
Rapid advances and adoption of generative AI, coupled with Amazon's deep vertical integration (custom silicon, proprietary models, tools for agent building/deployment), are fueling both incremental demand for AWS infrastructure and the rollout of new AI-powered features across retail and devices, creating operating leverage and supporting potential future margin expansion in high-growth segments.
Ongoing optimization of Amazon's logistics and fulfillment operations-including further automation, robotics, and inventory placement enhancements-is driving structural cost reduction, faster delivery speeds, and improved customer experience, contributing directly to higher net margins and improved operating income in both North America and international markets.
Continued international expansion, especially in emerging markets, with both improving operational efficiency and growing Prime member base, is driving scalable revenue growth and contributing to margin uplift as these regions reach profitability, supporting long-term consolidated margin and EPS growth.
Strengthening Prime ecosystem and marketplace flywheel (content, exclusive live sports, product selection, increasing Prime sign-ups, and new verticals like healthcare and Project Kuiper) are increasing recurring revenues, share of wallet, and customer retention, supporting durable top-line and premium margin growth over the long term.

Amazon.com Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Amazon.com's revenue will grow by 10.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.5% today to 12.3% in 3 years time.
Analysts expect earnings to reach $111.9 billion (and earnings per share of $10.14) by about September 2028, up from $70.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $70.7 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.4x on those 2028 earnings, down from 36.0x today. This future PE is greater than the current PE for the US Multiline Retail industry at 21.6x.
Analysts expect the number of shares outstanding to grow by 1.43% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.45%, as per the Simply Wall St company report.

Amazon.com Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent supply chain risks and uncertainty surrounding tariffs-especially those tied to China-could lead to higher costs for Amazon and its third-party sellers in the medium to long term; if these costs are absorbed or cannot be passed onto customers, this would pressure operating margins and possibly constrain revenue growth.
AWS, Amazon's main earnings driver, is experiencing both increased capital intensity (notably in custom chips and data centers) and growing competition, with challenges around supply constraints (e.g., power and semiconductors), and the need for massive ongoing investment-these factors risk compressing AWS's segment margins and limiting overall earnings growth if AWS fails to keep pace with rivals technologically or commercially.
Intensifying regulatory scrutiny (implied through references to legal risks, compliance, and SEC filings) and potential changes in global trade, data protection, and technology policy could raise compliance costs, limit Amazon's ability to scale certain businesses, and negatively affect profitability and revenue consistency.
Saturation and slower e-commerce growth in Amazon's core markets, particularly in mature geographies (e.g., U.S., U.K., Germany, Japan), could constrain long-term topline retail revenue growth and create greater dependence on more volatile or lower-margin international and emerging segment expansion.
Cost escalation risks from higher labor costs, logistics infrastructure investment, and the arms race in automation and AI (robotics, next-generation Alexa, Project Kuiper, etc.)-if not met with proportional efficiency gains or profitable monetization-could result in net margin compression and weaker earnings leverage over the long run.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $263.18 for Amazon.com based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $306.0, and the most bearish reporting a price target of just $225.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $905.9 billion, earnings will come to $111.9 billion, and it would be trading on a PE ratio of 33.4x, assuming you use a discount rate of 8.4%.
Given the current share price of $238.24, the analyst price target of $263.18 is 9.5% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.