In a significant move, Bank of America has encouraged investors to acquire shares of Amazon ahead of the company”s forthcoming earnings report. The financial institution included Amazon on a select list of stocks it deems to be well-positioned for growth, expressing confidence that the tech giant still has substantial potential for upward movement.
Analyst Justin Post articulated that Amazon”s current valuation reflects apprehension regarding the performance of its Amazon Web Services (AWS) segment. He pointed out that there are prospects for improvement in AWS revenue growth by 2026, especially as the company enhances its artificial intelligence capabilities. Essentially, the current share price may be constrained by uncertainties surrounding its cloud services, but Bank of America believes this situation is poised to change rapidly, urging investors to begin accumulating shares now.
The analysis from Bank of America suggests that Amazon is on track for multiple expansions as it continues to innovate with new AI tools. On the retail front, Post noted that the company is effectively implementing operational efficiencies, forecasting that Amazon”s profit growth will surpass that of other major technology players. This optimism comes as the company prepares to announce its fourth-quarter earnings for fiscal 2025, with expectations for earnings per share (EPS) to reach $1.97, up from $1.86 the previous year.
Amazon has consistently exceeded Wall Street”s profit expectations, having outperformed forecasts for four consecutive quarters. In the third quarter, it reported an EPS of $1.95, exceeding estimates by an impressive 23.4%. For the full fiscal year 2025, analysts predict a profit of $7.17 per share, marking a nearly 30% increase from last year”s $5.53. Furthermore, EPS is projected to reach $7.85 by 2026, reflecting another 9.5% growth.
This year, Amazon”s stock has seen a modest increase of 3%, while over the past 52 weeks, it has risen by 11.4%. However, these figures still lag behind the S&P 500″s 17.7% growth and the Consumer Discretionary ETF”s 11.6%. This performance gap is one of the key reasons why Bank of America believes there is significant upside potential remaining for Amazon.
The bullish stance on Amazon by Bank of America is part of a broader list that also highlights other companies such as Brookdale Senior Living, Carvana, Corning, and Vertiv, each selected for distinct reasons. Brookdale received an upgrade from analyst Joanna Gajuk, who raised her price target from $6.75 to $13 due to its favorable operating leverage and minimal exposure to government payors. Meanwhile, Carvana saw its price target increase to $515 from $455, with analyst Michael McGovern noting its expansion into physical dealerships and exceptional eCommerce growth.
