Amazon.com, Inc.

(NASDAQ Global Select)
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Neutral +10

Alphabet vs. Amazon: Buy One AI Stock, Think Twice About the Other ...

Analyst upgrade Market commentary AI-generated analysis

πŸ“… Amazon is scheduled to release its third-quarter earnings after Thursday's closing bell with Wall Street expecting $202 billion in revenue.

πŸ’° Analysts forecast earnings of $1.96 per share for Amazon, representing a modest 0.4% annual growth rate compared to the broader market.

☁️ AWS sales are projected to grow approximately 37% in the third quarter, serving as a key driver for Amazon's financial performance.

πŸ“‰ Investor Jonathan Weber assigns Amazon a Hold rating due to a valuation of 24x estimated 2027 profits deemed less attractive than Alphabet.

⚠️ Heavy infrastructure expenditures pose a risk if operating cash generation fails to cover planned investments in the coming period.

🚚 Rising transportation costs are expected to weigh on Amazon's consumer operations and potentially limit overall profitability.

πŸ“Š Despite Weber's neutral stance, Wall Street consensus remains bullish with 42 Buy ratings and an average price target implying 30% upside.

Bullish Signals
  • AWS sales are expected to grow about 37% in the third quarter, potentially compensating for higher delivery expenses.
  • Wall Street consensus rates Amazon as a Strong Buy with an average price target of $331.54 implying 30% upside over the coming year.
Risk Factors
  • Investor Jonathan Weber assigns a Hold rating, citing a valuation of 24 times estimated 2027 profits as less appealing than competitors.
  • Heavy infrastructure expenditures present a concern if operating cash generation fails to cover planned investments.
  • Rising transportation costs are expected to weigh on consumer operations and potentially limit overall profitability.
Full Analysis
Amazon (NASDAQ:AMZN) is preparing to release its third-quarter earnings report following the market reaction to Alphabet's recent results. Wall Street analysts anticipate Amazon will report revenue of $202 billion, representing a 12% annual growth rate, with earnings expected at $1.96 per share, which aligns with a modest 0.4% annual increase. Investor Jonathan Weber offers a mixed outlook for the e-commerce giant, assigning it a Hold rating while noting that its current valuation of approximately 24 times estimated 2027 profits makes it less attractive than Alphabet. He suggests that strong performance from Amazon Web Services (AWS), which is expected to grow roughly 37% in the third quarter, will be critical for supporting the stock. Weber highlights specific risks that could weigh on Amazon's profitability despite potential cloud expansion. These concerns include heavy infrastructure expenditures that might strain operating cash generation and rising transportation costs that could negatively impact consumer operations, potentially limiting overall margins even if revenue targets are met.