On Friday, TD Cowen expressed a positive outlook on Amazon.com (NASDAQ: NASDAQ:AMZN), maintaining a Buy rating and a $225.00 price target for the company's stock. The endorsement comes on the heels of TD Cowen's 12th annual Public Cloud report, which surveyed 283 U.S. respondents.
The findings indicated a strong forecast for Amazon Web Services (AWS) and the Public Cloud market, with an expected steady growth in spending of approximately 25% year-over-year in 2024.
The report highlights that AWS is likely to increase its capital expenditures in 2024 to expand its infrastructure capacity, particularly to support Generative AI (GenAI) technologies. The anticipated growth in services related to GenAI is projected to contribute over 2% to AWS's revenue growth in the same year.
TD Cowen's analysis also updated the Sum of the Parts (SOTP) valuation for 2025, which now suggests that AWS's Enterprise Value could reach approximately $1.03 trillion. This valuation reflects the firm's confidence in AWS's continued expansion and its pivotal role in the broader Public Cloud sector.
The firm's forecast is based on the robust spending trends observed in the Public Cloud space, which are expected to persist. This outlook underscores the potential for AWS to further cement its position as a leading provider of cloud services, driven by the integration of GenAI and the overall positive momentum in cloud computing.
In other recent news, European banks are expressing concerns about their growing reliance on Big Tech for artificial intelligence (AI) operations. Recognizing the potential risk, the United Kingdom proposed regulations last year to manage financial firms' dependence on tech giants like Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), IBM (NYSE:IBM), and Amazon. Meanwhile, ING is experimenting with an AI chatbot for customer service, with expectations of managing over half of customer interactions within a year.
Cathie Wood's ARK ETF has made significant adjustments to its holdings. The fund has purchased 53,368 shares in Amazon, while selling 14,121 shares of ServiceNow (NYSE:NOW), a cloud computing company. Other notable transactions include the sale of Exact Sciences (NASDAQ:EXAS) Corp shares and the acquisition of a significant stake in Intellia Therapeutics (NASDAQ:NTLA) Inc.
Amazon is facing a £1 billion lawsuit filed by the British Independent Retailers Association (BIRA), accusing the e-commerce giant of exploiting non-public data from retailers on its Marketplace platform. The lawsuit also claims that Amazon has manipulated its "Buy Box" feature to favor its own products.
Zoox, a subsidiary of Amazon, is expanding its autonomous vehicle testing to Austin, Texas, and Miami, Florida. The company will be using a fleet of retrofitted Toyota (NYSE:TM) Highlanders, equipped with human safety drivers. However, Zoox is currently under investigation by the National Highway Traffic Safety Administration following two crashes involving its fleet of automated vehicles.
InvestingPro Insights
Complementing TD Cowen's bullish stance on Amazon.com (NASDAQ: AMZN), InvestingPro data underscores the company's robust financial health and market position. With a massive market capitalization of $1.92 trillion and a revenue growth of 12.54% for the last twelve months as of Q1 2024, Amazon's financials mirror the optimism around its cloud services division, AWS. The company's gross profit margin stands at an impressive 47.59%, illustrating its ability to maintain profitability amidst its expansion efforts.
InvestingPro Tips highlight Amazon's status as a dominant player in the Broadline Retail industry, with significant earnings revisions by analysts, suggesting a positive outlook for upcoming periods. Moreover, Amazon's stock has shown a high return over the last year, with a 52.6% price total return, reflecting investor confidence. These factors, coupled with a strong revenue base and a high EBITDA growth of 66.24% for the last twelve months, suggest that the company is well-positioned to leverage the growth in the Public Cloud market and GenAI technologies.
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