Will Analyst Optimism on Cloud and Ads Growth Shift Amazon.com's (AMZN) Profitability Narrative?

• Leading up to Amazon’s quarterly earnings announcement, multiple top analysts expressed optimism about the company’s growth prospects in cloud computing and advertising, highlighting expanded Amazon Ads capabilities and AWS service momentum.
• Efficiency initiatives, such as recent corporate job cuts and large-scale automation, have further shaped expectations for an improved operational performance and profitability at Amazon, as investors await its results.
• We'll explore how the anticipated growth in Amazon's cloud and advertising businesses could influence the company's investment outlook going forward.

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Amazon.com Investment Narrative Recap

To be an Amazon shareholder, you need to believe the company can maintain its leadership across e-commerce, cloud, and advertising, and that these segments will offset growing competition and cost pressures. The recent surge of optimism around Amazon’s cloud and ads business remains intact, as the news flow, including expanded ad platform capabilities, does not materially alter upcoming earnings catalysts or introduce new business risks in the near term.

Among the latest announcements, the upgraded collaboration between Clinch and Amazon Ads stands out by enhancing ad targeting and privacy for brands using Amazon DSP. With advertising being a key short-term catalyst, this supports the bullish analyst sentiment around Amazon’s potential to capture incremental revenue and strengthen its high-margin segments.

Yet, in contrast to this momentum, investors should stay alert to the squeeze on AWS margins if supply constraints or high investment needs outpace...

Read the full narrative on Amazon.com (it's free!)

Amazon.com's outlook anticipates $905.9 billion in revenue and $111.9 billion in earnings by 2028. This scenario relies on an annual revenue growth rate of 10.6% and represents a $41.3 billion increase in earnings from the current level of $70.6 billion.

Uncover how Amazon.com's forecasts yield a $266.56 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Community members on Simply Wall St estimate Amazon's fair value between US$173 and US$273 across 132 viewpoints. As you weigh AWS investment risks, consider how differently participants assess the company's long-term earnings power.

Explore 132 other fair value estimates on Amazon.com - why the stock might be worth as much as 20% more than the current price!

Build Your Own Amazon.com Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Amazon.com research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Amazon.com research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Amazon.com's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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