On Thursday, BMO (TSX:BMO) Capital Markets sustained its optimistic stance on Amazon.com Inc. (NASDAQ:AMZN) stock, maintaining an Outperform rating and a $220.00 price target for the company's shares.
The firm's affirmation comes after Amazon showcased its artificial intelligence (AI) capabilities at a summit in New York City, where it demonstrated the breadth of its AI and machine learning (ML) services.
According to BMO Capital, Amazon Web Services (AWS) revealed its "underappreciated AI toolkit," which has reportedly become a multi-billion dollar business segment for Amazon.
The analyst noted that despite the market's perception of Amazon trailing its major competitors in AI, the company has launched more than twice as many AI services compared to Microsoft (NASDAQ:MSFT) and Google (NASDAQ:GOOGL) combined since 2023.
The analyst believes that the market is undervaluing Amazon's potential to capture a significant portion of AI workloads. The firm suggests that Amazon's platform strategy, which includes its Bedrock service, positions the company favorably for long-term success in the AI space.
BMO Capital's reiteration of the Outperform rating indicates confidence in Amazon's ability to leverage its AI offerings effectively. The $220.00 price target suggests that the firm anticipates the stock to perform well in the foreseeable future, based on Amazon's strategic initiatives and growth in its AI and ML business.
In other recent news, Amazon Web Services (AWS) and Workday (NASDAQ:WDAY), Inc. have strengthened their partnership to advance generative artificial intelligence (AI) capabilities. This collaboration aims to expedite cloud transformation, enhancing productivity, talent retention, and business processes.
Workday is integrating AWS technologies to develop generative AI tools for tasks such as job description creation and contract analysis. Furthermore, Workday and AWS are investing in joint sales and go-to-market initiatives to support customer cloud adoption.
On a different note, Amazon faces potential scrutiny from Britain's Groceries Code Adjudicator due to concerns over its treatment of UK grocery suppliers. Amazon's compliance score has dropped to 47%, indicating a need for improvement. The company has expressed commitment to enhancing its compliance with the Groceries Supply Code of Practice.
In the media sector, Amazon has entered a landmark $76 billion broadcasting agreement with the National Basketball Association, alongside Comcast (NASDAQ:CMCSA)'s NBC and Disney's ESPN. This 11-season deal indicates a significant expansion of the NBA's broadcasting arrangements.
TD (TSX:TD) Cowen has raised Amazon's share target, forecasting an 11.8% year-over-year increase in revenues for the second quarter of 2024. This prediction is attributed to anticipated growth in Amazon Web Services and advertising revenues. Lastly, Talen Energy has requested the Federal Energy Regulatory Commission to dismiss objections to its interconnection agreement with Amazon for a data center project.
InvestingPro Insights
Amazon.com Inc. (NASDAQ:AMZN) continues to capture the attention of investors with its robust expansion into artificial intelligence and machine learning. The latest data from InvestingPro underscores the financial muscle that backs Amazon's ambitious AI initiatives. With a staggering market capitalization of $2.08 trillion and a revenue growth of 12.54% in the last twelve months as of Q1 2024, Amazon is not just a dominant player; it's a financial behemoth with the resources to push the boundaries of technological innovation.
InvestingPro Tips highlight the company's ability to cover interest payments with its cash flows and its impressive return over the last year. These insights suggest that Amazon is not only growing but also managing its finances prudently amidst its aggressive expansion strategies. Moreover, with analysts predicting profitability this year and a significant price uptick over the last six months, Amazon's stock price is trading near its 52-week high, reflecting investor confidence in the company's trajectory.
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