Amazon (AMZN) AI Stock Analysis

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Amazon

(NASDAQ:AMZN)

Rating:73Outperform

Price Target:

$233.00

▲(7.82%Upside)

Amazon's overall stock score reflects a strong financial performance and positive earnings call outcomes, with growth in key areas such as AWS and advertising. However, technical analysis indicates potential overbought conditions, and a high P/E ratio raises valuation concerns. Despite these challenges, Amazon's strategic initiatives and robust financials provide confidence in its long-term potential.

Positive Factors

Ad Revenue Growth

Amazon Prime Video ad revenues are expected to nearly double, contributing to high-margin growth.

AI and Delivery Efficiency

Amazon is leveraging AI innovations to improve delivery efficiency and reduce costs, enhancing its competitive position in retail.

Robotics and Automation

Robots in delivery could drive billions in savings, with an estimate of over $7.1 billion in annual savings by 2032.

Negative Factors

Grocery Market Share

Amazon's combined grocery market share with Whole Foods is significantly lower than other major national grocers.

Regulatory Challenges

Obtaining regulatory approval on a local basis could be a challenge and would limit rapid geographic expansion of robot delivery.

Amazon (AMZN) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.25T

Dividend YieldN/A

Average Volume (3M)37.83M

Price to Earnings (P/E)34.6

Beta (1Y)1.28

Revenue Growth10.08%

EPS Growth71.88%

CountryUS

Employees1,560,000

SectorConsumer Cyclical

Sector Strength58

IndustrySpecialty Retail

Share Statistics

EPS (TTM)1.59

Shares Outstanding10,616,353,000

10 Day Avg. Volume34,968,931

30 Day Avg. Volume37,829,564

Financial Highlights & Ratios

PEG Ratio2.91

Price to Book (P/B)5.86

Price to Sales (P/S)0.00

P/FCF Ratio-50.66

Enterprise Value/Market Cap0.42

Enterprise Value/Revenue0.37

Enterprise Value/Gross Profit2.95

Enterprise Value/Ebitda1.97

Forecast

1Y Price Target

$241.64

Price Target Upside11.82% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering47

Amazon Business Overview & Revenue Model

Company DescriptionAmazon.com, Inc. engages in the retail sale of consumer products and subscriptions through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). Its products offered through its stores include merchandise and content purchased for resale; and products offered by third-party sellers The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, Blink, eero, and Echo; and develops and produces media content. In addition, it offers programs that enable sellers to sell their products in its stores; and programs that allow authors, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, the company provides compute, storage, database, analytics, machine learning, and other services, as well as fulfillment, advertising, and digital content subscriptions. Additionally, it offers Amazon Prime, a membership program. The company serves consumers, sellers, developers, enterprises, content creators, and advertisers. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.

How the Company Makes MoneyAmazon generates revenue through multiple streams, primarily focusing on its e-commerce platform and cloud computing services. The e-commerce segment includes product sales and commissions from third-party sellers using Amazon's marketplace. Amazon charges these sellers fees for listing and selling their products on its platform. Additionally, Amazon earns money from subscription services, such as Amazon Prime, which offers members benefits like free shipping, streaming access, and exclusive deals. Amazon Web Services (AWS) is a major revenue driver, providing scalable cloud computing solutions to businesses and governments, and is known for its high profitability. Advertising services are another significant source of income, as businesses pay Amazon to promote their products on its platform. Furthermore, Amazon has strategic partnerships and acquisitions that enhance its market position and expand its product offerings, contributing to its overall earnings.

Amazon Key Performance Indicators (KPIs)

Any

AWS Performance Obligations

AWS Performance Obligations
Reflects future revenue commitments for AWS services, indicating the strength of customer demand and the potential for sustained growth in Amazon's cloud business.

Chart InsightsAWS performance obligations have shown consistent growth, reaching $189 billion by Q1 2025, reflecting strong demand and long-term commitments. The earnings call highlighted AWS's 17% year-over-year revenue growth, driven by expanding AI capabilities and a $117 billion annualized revenue run rate. This growth underscores AWS's strategic importance to Amazon's overall business, despite broader economic uncertainties and tariff impacts. The focus on AI and cloud services positions AWS as a key driver of Amazon's future revenue streams, enhancing its competitive edge in the tech sector.

Data provided by:

Main Street Data

Amazon Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q1-2025)

% Change Since: 13.62%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth and operational performance, particularly in Amazon Ads and AWS. There were concerns about potential impacts from tariffs and some one-time charges affecting operating margins, but these did not overshadow the positive financial results and innovations in AI and delivery speed improvements.

Q1-2025 Updates

Positive Updates

Revenue Growth and Operating Income Increase

Amazon reported $165.7 billion in revenue for Q1 2025, up 10% year-over-year, excluding the impact from foreign exchange rates. Operating income increased by 20% year-over-year to $18.4 billion.

Amazon Ads Success

Amazon Ads generated $13.9 billion in revenue, growing 19% year-over-year, demonstrating strong growth across its advertising offerings.

AWS Performance and AI Expansion

AWS grew 17% year-over-year to a $117 billion annualized revenue run rate. The AI business showed a multi-billion dollar annual revenue run rate, growing in triple-digit percentages year-over-year.

Record Delivery Speeds

Amazon set new delivery speed records, delivering more items in the same day or next day in Q1 than any other quarter in its history.

Negative Updates

Impact of Tariffs and Inventory Challenges

Amazon faced potential challenges from heightened tariffs, leading to some forward buying and increased inventory costs.

One-Time Charges Affecting Operating Margins

One-time charges related to historical customer returns and costs to receive inventory impacted operating margins in North America and international segments.

Company Guidance

In the Amazon Q1 2025 financial results call, the company provided guidance incorporating several metrics. Amazon reported $165.7 billion in revenue, marking a 10% year-over-year increase, excluding foreign exchange impacts. Operating income reached $18.4 billion, up 20% from the previous year. The trailing 12-month free cash flow stood at $25.9 billion. The company highlighted its achievements in delivery speed, setting new records for same-day and next-day deliveries, and emphasized the efficiency of its regionalized fulfillment network. Amazon Ads generated $13.9 billion in revenue, growing 19% year-over-year. AWS, Amazon's cloud segment, achieved a 17% year-over-year growth, resulting in a $117 billion annualized revenue run rate. The call also addressed potential impacts from tariffs and outlined Amazon's strategic focus on maintaining low prices and broad selection amidst uncertain economic conditions.

Amazon Financial Statement Overview

Summary

Amazon demonstrates solid financial performance with strong profitability, efficient operations, and a stable balance sheet. Revenue growth and profitability metrics are robust, supporting an optimistic outlook. The balance sheet is well-managed, though reducing debt could enhance financial flexibility. Cash flow remains strong, though the decline in free cash flow should be monitored. Overall, Amazon's financial health is commendable, reflecting its position as a leading player in the specialty retail sector.

Income Statement

Very Positive

Amazon's income statement reveals strong profitability and growth. The TTM (Trailing-Twelve-Months) gross profit margin stands at 45.37%, indicating solid cost management. The net profit margin is a robust 10.14%, showcasing effective conversion of revenues into profit. Revenue growth is consistent, with a 2% increase from the previous year, reflecting steady expansion. EBIT and EBITDA margins are healthy at 11.02% and 17.98% respectively, underscoring operational efficiency.

Balance Sheet

Positive

Amazon's balance sheet is strong, with a debt-to-equity ratio of 0.44, indicating prudent leverage. The return on equity (ROE) is a solid 21.56%, highlighting effective use of shareholder funds. The equity ratio is 47.54%, reflecting a stable capital structure with significant equity financing. Overall, the company maintains a healthy balance between debt and equity, although there is room for improvement in reducing total debt.

Cash Flow

Positive

The cash flow statement shows robust operating cash flow to net income ratio of 1.73, indicating strong cash generation capabilities. However, the free cash flow has decreased by 36.67% compared to the previous year, which could be a concern. The free cash flow to net income ratio is 0.32, suggesting moderate cash conversion efficiency. Overall, while operating cash flow remains strong, the decline in free cash flow warrants attention.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
650.31B	637.96B	574.78B	513.98B	469.82B	386.06B
	Gross Profit
319.68B	311.67B	270.05B	225.15B	197.48B	152.76B
	EBIT
71.69B	68.59B	36.85B	12.25B	24.88B	22.90B
	EBITDA
134.99B	123.81B	89.40B	38.35B	74.39B	51.01B
	Net Income Common Stockholders
65.94B	59.25B	30.43B	-2.72B	33.36B	21.33B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
94.56B	101.20B	86.78B	70.03B	96.05B	84.40B
	Total Assets
643.26B	624.89B	527.85B	462.68B	420.55B	321.19B
	Total Debt
133.25B	130.90B	135.61B	140.12B	116.39B	84.39B
	Net Debt
67.04B	52.12B	62.22B	86.23B	80.17B	42.27B
	Total Liabilities
337.39B	338.92B	325.98B	316.63B	282.30B	227.79B
	Stockholders Equity
305.87B	285.97B	201.88B	146.04B	138.25B	93.40B
Cash Flow		Free Cash Flow
20.81B	32.88B	32.22B	-16.89B	-14.73B	25.92B
	Operating Cash Flow
113.90B	115.88B	84.95B	46.75B	46.33B	66.06B
	Investing Cash Flow
-106.28B	-94.34B	-49.83B	-37.60B	-58.15B	-59.61B
	Financing Cash Flow
-10.60B	-11.81B	-15.88B	9.72B	6.29B	-1.10B

Amazon Technical Analysis

Technical Analysis Sentiment

Positive

Last Price216.10

Price Trends

50DMA

195.45

Positive

100DMA

204.52

Positive

200DMA

203.36

Positive

Market Momentum

MACD

4.83

Negative

RSI

64.35

Neutral

STOCH

67.55

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMZN, the sentiment is Positive. The current price of 216.1 is above the 20-day moving average (MA) of 208.36, above the 50-day MA of 195.45, and above the 200-day MA of 203.36, indicating a bullish trend. The MACD of 4.83 indicates Negative momentum. The RSI at 64.35 is Neutral, neither overbought nor oversold. The STOCH value of 67.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AMZN.

Amazon Risk Analysis

Amazon disclosed 24 risk factors in its most recent earnings report. Amazon reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Amazon Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BABA	81 Outperform	$274.41B	15.19	13.04%	0.85%	4.28%	28.42%
MELI	80 Outperform	$120.25B	58.35	49.11%	―	41.92%	81.11%
JD	79 Outperform	$52.01B	7.99	19.81%	2.99%	8.13%	91.39%
SE	77 Outperform	$93.65B	111.24	11.13%	―	30.18%	1995.22%
AMZN	73 Outperform	$2.25T	34.59	25.24%	―	10.08%	71.88%
PDD	72 Outperform	$139.68B	10.83	36.31%	―	35.04%	22.04%
Sector *	62 Neutral	$6.88B	11.07	2.77%	4.28%	2.67%	-24.94%

* Consumer Cyclical Sector Average

Performance Comparison

AMZN

Amazon

216.10

32.04

17.41%

MELI

Mercadolibre

2,454.76

895.53

57.43%

33.48

4.24

14.50%

BABA

Alibaba

115.96

42.64

58.16%

Sea

158.19

83.27

111.15%

PDD

PDD Holdings

102.79

-45.51

-30.69%

Amazon Corporate Events

Executive/Board ChangesShareholder Meetings

Amazon Shareholders Meeting Highlights Key Decisions

Neutral

May 22, 2025

On May 21, 2025, Amazon held its Annual Meeting of Shareholders where several directors were elected, and Ernst & Young LLP was ratified as the independent auditor for 2025. Despite the approval of executive compensation, multiple shareholder proposals, including those on CEO-Chair separation, advertising risks, emissions reporting, and AI oversight, were not approved, indicating a potential disconnect between shareholder interests and company decisions.

The most recent analyst rating on (AMZN) stock is a Buy with a $220.00 price target. To see the full list of analyst forecasts on Amazon stock, see the AMZN Stock Forecast page.

Business Operations and StrategyFinancial Disclosures

Amazon’s Recent Regulation FD Disclosure Event

Positive

Apr 10, 2025

In 2024, Amazon experienced strong financial growth, with total revenue increasing by 11% year-over-year to $638 billion, and operating income improving by 86% to $68.6 billion. The company expanded its product offerings and services, including advancements in AI and infrastructure through AWS, and continued to enhance customer experiences across its platforms. Amazon’s commitment to innovation and customer satisfaction is reflected in its ‘Why Culture,’ which emphasizes curiosity and problem-solving to drive success.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.