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Amazon (AMZN) upped its AI game this week with the launch of Nova Act, an agentic AI model that performs complex tasks using web browsers. The breakthrough marks Amazon’s entry into the high-stakes arena of AI “agents” following the likes of OpenAI, Anthropic, and Google (GOOGL), who are at the forefront of multi-step independent task completion. Nova Act is currently available as a research preview and is intended to allow developers to build live AI agents.
This launch is among a number of steps Amazon is taking to expand its generative AI footprint. Amazon is also investing more in AI chips (Trainium), Bedrock (its marketplace of AI models), and a brand-new Alexa. Nova’s release and the development of an internal AGI team that reports to CEO Andy Jassy directly highlight Amazon’s emphasis on redefining its future growth.
About Amazon Stock
Amazon (AMZN) is headquartered in Seattle, Washington, and is the world leader in e-commerce, cloud computing, and digital services, boasting a market cap of $2.04 trillion. It has over 1.5 million employees and three business sectors: North America, International, and Amazon Web Services (AWS). AWS is the profit driver and global leader in cloud infrastructure.
AMZN stock is trading near $195, up approximately 8.7% over the past 12 months. Shares are down 10.5% in the year to date.
Amazon is trading at 33.67x trailing price-earnings ratio (P/E) and 30.1x forward P/E, and its price-sales ratio and price-cash flow ratios are 3.16x and 18x respectively. These are elevated multiples relative to historical levels, but they reflect investors’ confidence in the long-term monetization of AI and AWS growth. It has a return on equity of 24.25% and has relatively moderate leverage with a debt-equity ratio of 0.18x.
Amazon Beats on Earnings
Amazon delivered a strong Q4 2024 earnings announcement, at EPS of $1.86, versus Wall Street’s estimate of $1.52 — an earnings beat of 22.4%. Revenue hit $187.79 billion, driven by AWS, growing at an even more rapid clip than anticipated, and strong advertising and retail performance.
Guiding conservatively for Q1 2025, the consensus estimate is $1.38 EPS, or 22.1% year-over-year growth, based on 15 estimates. Further, consensus estimates are calling for 2025 EPS of $6.32, up 14.3% from 2024’s $5.53.
What Do Analysts Expect for Amazon Stock?
53 experts cover Amazon and assign it a consensus “Strong Buy” rating. 48 recommend it as a “Strong Buy,” four as “Moderate Buy,” and one as “Hold” — a bullish consensus that has been stable over the past three months.
The average price target is $267.92, representing 38% upside from the current stock price. The Street-high price target is $306, representing 57% upside.
Amazon’s Nova Act rollout is a watershed moment in its AI trajectory, and it is a long-term plan centered on agentic computing and smart automation. The stock is richly valued, but execution excellence in AWS, advertising, and AI positions the company to keep growing.
Strong earnings, growing investments in AI, and an unshaken “Strong Buy” from the Street make Amazon a “Buy” for long-term investors who are looking to get exposure to generative AI at huge scale.
