Amazon stock rose Monday during a strong day for U.S. tech stocks. Shares of the tech giant have fallen for seven straight weeks amid a broader market slump but analysts remain positive on Amazon's long-term growth potential, particularly from AI.
On the stock market today, Amazon stock is up 2.9% at 201.95. The stock is trading above its 21-day moving average for the first time since Feb. 11. Amazon also retook its longer-term 200 day moving average after slipping below the long-term trendline on March 12.
President Donald Trump signaled that his plans for reciprocal tariffs starting April 2 will include "flexibility." That helped to at least temporarily ease the trade war concerns that have weighed on stocks in recent weeks.
Meanwhile, Amazon also got some upbeat analyst commentary on its AI potential following chipmaker Nvidia's closely-watched industry conference last week.
Amazon Stock Among AI Beneficiaries
Monness Crespi Hardt analyst Brian White offered a positive take on Amazon's AI cloud positioning following the GTC AI conference last week hosted by Nvidia. The Nvidia event was dubbed the "Super Bowl of AI" but it did little to boost U.S. tech stocks last week.
"We believe this subdued response reflects the market's near-term focus on a rocky macro environment and waning enthusiasm for the gen AI trade after more than two years of hyperbole with few beneficiaries," White wrote.
However, Amazon is among those few, he said. Its Amazon Web Services cloud business " has already benefited from gen AI by training LLMs (large language models), and we expect its growth drivers to broaden over time," White wrote.
There is a bigger potential opportunity ahead, the research note added. While Amazon's growth from AI has been focused on training AI models, Nvidia Chief Executive Jensen Huang told analysts last week that there will be a larger market in the future for running AI models, known as inferencing.
White reiterated a buy call for Amazon stock and target price of 265. Despite "near-term turbulence, AWS remains well-positioned for long-term AI trends," the analyst's note said.
Meanwhile, Wedbush analyst Dan Ives said Monday that AI spending is now driving 12% of IT budgets, up from 10% in January, and will accelerate through the rest of the year.
"We are seeing many IT departments focused on foundational hyperscale deployments for AI around Microsoft, Amazon, and Google with a laser focused on the software driven use cases currently underway," Ives wrote.
Amazon: Spending Big On Capex
Amazon is looking to break a weekly losing streak that is its longest since an eight-week slide in 2022. Shares of the tech giant have fallen 16% from a early February high. Amazon's slump started after the company provided a lower-than-expected sales forecast with its Q4 results on Feb. 6. A broader market slump has added the Amazon stock's recent slide.
Still, Amazon remained committed during its last earnings report to spending big on capital expenditures on data centers and advanced computing chips, among other costs, to serve AI-related demand. Coming out the Nvidia conference, Melius Research analyst Ben Reitzes told clients Monday that Nvidia's orders from big cloud providers "do seem firm" despite concerns about the economy and trade regulations for AI chips and other infrastructure.
The massive spending plans from cloud hyperscalers Amazon, Meta Platforms, Google parent Alphabet and Microsoft could offer a positive signal, according to Melius. The four companies are expected to spend $338 billion on capital expenditures this year, according to Melius. That's up more than 40% year-over-year.
"One of the big differences between this era and the dot-com bubble of 1995-2000 is that we didn't have four hyperscalers so big and well capitalized committed to spending to achieve AGI (artificial general intelligence) back then," Reitzes wrote in a Monday client note.
