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2024 turned out to be a good year for Amazon (AMZN) investors, as the stock is up 48% based in the year to date. The e-commerce giant is outperforming the S&P 500 Index ($SPX) and hit record highs after Election Day. Can Amazon keep it up into the new year and beyond?
AMZN Stock Price 2025 Forecast
Amazon has a “Strong Buy” rating from roughly 92% of the analysts actively covering the stock, which is the highest of its “Magnificent 7” peers. Notably, sell-side analysts have been quite bullish on Amazon over the last couple of years and multiple brokerages listed it as a “top idea” for 2022, 2023, and 2024.
Evercore ISI, TD Cowen, and JPMorgan are among the brokerages that have listed Amazon as a top idea for 2025. I won’t be surprised if more analysts jump on the bandwagon and name AMZN among their best ideas for the next year.
Amazon’s Street-high target price of $285 is 26.7% higher than its Dec. 20 closing price. Its mean target price of $243.02 is however only about 8% higher. Notably, while several analysts raised Amazon’s target price following its third-quarter earnings release, the stock has run up significantly since Donald Trump’s election.
Amazon Is Expected to Deliver Strong Growth in 2025
Analysts are modeling a 10.8% year-over-year rise in Amazon’s revenues in 2025. I believe this could end up being conservative.
Trump’s proposed extension and expansion of 2017 tax cuts could boost consumption and spur discretionary spending, which is one segment of the economy that has sagged. Amazon’s North America e-commerce operations – the company’s biggest revenue segment – should get a boost from an expected improvement in consumer spending next year.
Amazon is also an underappreciated artificial intelligence (AI) play and AI spending is fueling the demand for its enterprise-focused Amazon Web Services (AWS). During the Q3 earnings call, CEO Andy Jassy said that AWS’s AI business is at a “multibillion-dollar” run rate and is growing at triple-digit percentages, which he said was three times the growth that AWS witnessed at this stage of its evolution. He termed generative AI as a “really unusually large, maybe once-in-a-lifetime type of opportunity."
Amazon’s Margins Might Continue to Expand in 2025
Amazon has improved its margins which has led to strong growth in its bottom line. Analysts expect roughly 77% growth in its earnings in 2024 and then 20% in 2025. If the company can continue with its efficiency initiatives and expand its e-commerce margins further, its profits should expand at a much faster pace than what analysts are currently predicting.
Amazon’s Long-Term Forecast Looks Bullish
Amazon’s long-term forecast also looks bullish given the multiple high-growth industries that the company is present in. The pivot to e-commerce from physical retail is expected to continue, which is good for Amazon, and its recently launched low-cost Haul platform should help the company increase its market reach further. AWS also has a decent growth runway, especially thanks to AI demand.
The same is true for Amazon’s digital advertising business as it ramps up ads on Prime. Launching an ad-supported tier coupled with a password-sharing crackdown did wonders for Netflix (NFLX), and a similar playbook could pay off for Amazon.
AMZN trades at around 43x its expected earnings over the next 12 months, which although it is high, is overall reasonable considering how much growth Amazon could achieve in revenue and earnings in 2025.
Overall, I believe Amazon is a good buy for 2025 and among the best-positioned Big Tech companies for the next couple of years.
