Amazon (AMZN) Stock Forecast & Price Target

Amazon.com demonstrates a robust financial outlook, highlighted by a significant 19% year-over-year revenue increase in its Amazon Web Services (AWS) segment, reaching $28.8 billion in 4Q24, alongside a remarkable operating income growth of 48%, resulting in a 37% operating margin. The company also reported a notable expansion in operating margins across its business segments, with North America's margin increasing to 8% and international margins improving to 3%, reflecting efficiency gains and strategic investments. Furthermore, Amazon's advertising revenue reached an annualized $69 billion run rate, with a high estimated margin, coupled with a substantial 65% year-over-year growth in Prime memberships, indicating strong customer engagement and future revenue potential.

The financial outlook for Amazon.com reflects a cautious stance, with FY25 revenue estimates reduced to $699.4 billion, representing a 10% year-over-year increase but falling 1% behind prior projections. Product sales have stagnated within a narrow range for the past quarters, and a potential deceleration in growth in a faltering economy could pressure trading multiples, especially with an estimated $2.1 billion negative impact from foreign exchange effects. Additionally, a lower assumed useful life for certain servers is projected to diminish FY25 operating income by approximately $700 million, highlighting underlying operational challenges amidst an otherwise robust service segment.