Amazon stock forecast for the next 12 months averages $173.07, with a $110.00 minimum price and a maximum of $232.75. The stock forecast was updated after Amazon reported higher-than-expected revenue for Q2 2022 on July 28th, 2022. The 51 Wall Street analysts making the forecast are bullish on Amazon, with the minimum stock forecast very close to AMZN’s current price. The price prediction, however, represents a drop compared to the average price target of $277 the analysts made during June.
The latest stock forecast was strongly influenced by the earnings results presented for second trimester. Amazon Web Services brought in $19.7 billion, which was higher than the $19.56 billion forecast. Advertising spending came in at $8.76 billion, exceeding the $8.65 billion forecasted by industry specialists.
Contrary to its Big Tech competitors, which had all reported disappointing results before Thursday, its 7 percent revenue growth in the second quarter exceeded estimates. Both Apple and Amazon surpassed expectations. Amazon predicted that its third-quarter revenue would be between $125 billion and $130 billion, representing a growth of 13 percent to 17 percent.
Amazon has had to deal with increased expenses because of the surplus of staff and storage space that resulted from the company’s rapid growth in response to the pandemic. After nearly tripling in size during the pandemic, Amazon reduced its workforce to 1.52 million by the end of the second quarter.
In light of recent economic instability, many technology firms have announced layoffs, hiring freezes, and the withdrawal of job offers. CFO Brian Olsavsky told reporters on a call that Amazon will keep hiring engineers for departments like Amazon Web Services and advertising but will be careful about expanding into new areas.
Amazon.com Q2 earnings results are very promising, according to analysts and stock forecast experts.
According to Olsavsky, “it’s appropriate for people to take a step back and question their hiring plans.” So we’re doing it too. But unfortunately, I don’t think hiring will continue at the same rate as it has over the past year or two. After the electric vehicle manufacturer’s stock dropped by 49 percent in the second quarter, Amazon wrote off a loss of $3.9 billion on its investment in Rivian. That makes its investment loss for the year $11.5 billion.
Amazon lost $2 billion in the quarter due to the write-down on its investment in Rivian. Analysts’ earnings per share predictions varied so widely that it was difficult to find a common denominator against measuring actual performance.
CEO RJ Scaringe and Udit Madan unveiled the Rivian EV van for Amazon. On July 21, 2022, in Chicago, Illinois, Amazon and Rivian unveiled their final custom Electric Delivery Vehicles (EDVs) in preparation for using them for customer deliveries. Because of the Covid-19 outage, Amazon’s core e-commerce business is still struggling. As a result, revenue from the company’s online retail division fell by 4% annually. However, the 12 percent increase in retail sales compared to the same period last year is further evidence of the continued recovery of the brick-and-mortar sector.
In an otherwise dismal quarter for online advertising, Amazon’s ad business stands out as evidence that the company is gaining ground in one of its most promising areas of operation.
During that time, ad sales increased by 18 percent. Meanwhile, Facebook saw its first-ever revenue decline and predicted an even steeper drop for the third quarter. Likewise, alphabet’s ad growth slowed to 12%, and YouTube’s slowed dramatically to 4% from 84% a year earlier.
Like many leading technology firms, Microsoft reported poor earnings this week. However, apple’s earnings and revenue forecasts were both exceeded, leading to a stock price increase after the bell. The cloud division at Amazon is doing well. Sales at Amazon Web Services increased by 33% year over year to $19.74 billion, beating the $19.56 billion predicted by Wall Street.
After adjusting for the investment loss, operating income dropped from $7.7 billion to $3.3 billion. With its $5.7 billion operating income, AWS was solely responsible for Amazon’s entire profit for the quarter. The positive results may also help boost confidence in Jassy, who succeeded Jeff Bezos as CEO a year ago. However, there have been many difficulties in Jassy’s first year on the job, such as an ongoing labor dispute, a declining market, increased regulatory pressure, and the loss of talented employees.
Furthermore, he is expected to demonstrate that he can restore growth to Amazon’s core retail business despite the company’s exposure to macroeconomic headwinds such as rising inflation and falling discretionary spending.
Stock Forecast Considers Amazon as the Most Valuable Company in the World, Even Though It Receives the Least Attention.
The stock forecast price of Amazon.com (NASDAQ: AMZN), which has dropped more than 40% from its November high and 35% this year, does not seem to represent the bullish view of AWS’s long-term prospects. At a current market cap of $1.1 trillion, Amazon’s shares have taken a beating due to several reasons other than the overall market gloom.
In recent quarters, investors’ expectations for the company’s e-commerce operations have fallen short of actual performance, as some buyers returned to physical shops during the pandemic’s worst months. Amazon has admitted that it overexpanded its logistical infrastructure and people in response to rising pandemic-era demand, causing expenses to rise. Even as gasoline prices continue to rise and labor unions continue their efforts to organize Amazon’s staff, the corporation continues to face heavy regulatory scrutiny.
The cloud computing division of Amazon, on the other hand, has developed what is unquestionably a world-class growth business—albeit one that is still young.
Redburn, a UK-based research organization, estimates AWS’s value at $3 trillion in a 128-page study released to kick off their coverage of the cloud market. Microsoft MSFT +1.47 percent (MSFT) Azure isn’t as high on his list of potential investments, but he still believes it’s worth $1 trillion, or almost half of Microsoft’s current market capitalization.
For both Amazon and Microsoft, Haissl gave Buy grades in the study. With a Neutral recommendation on data warehouse and analytics firm Snowflake SNOW –0.51 percent (SNOW) and a Sell on database software company MongoDB (MDB), he sees less possibility for two other significant competitors in the cloud market. There were four-goal pricing he established for Amazon (now $109), Microsoft (now $260), and Snowflake ($125): $190 for MongoDB (currently $277), $270 for Amazon, and $370 for Microsoft.
Amazon was up 1.1 percent, Microsoft was up 1.5%, MongoDB was down 0.6%, and Snowflake was down 0.5% in Wednesday trade. The Nasdaq Composite COMP was down by just 0.03%.
Cloud firms, according to the analyst, can maintain strong growth for much longer than the Street normally forecasts, and he points out that his predictions for AWS for the next five years are on average 20% higher than the consensus. Amazon may one day opt to split AWS from the rest of the corporation, according to Haissl.
In the author’s view, cloud computing has a long way to go, which could be hard to envision after a period of tremendous advancement. Because of the cloud’s complexity, it might be difficult to find out exactly what’s going on. According to him, AWS, Azure, and Alphabet GOOGL –0.27%’s (GOOGL) Google Cloud Platform manages the most essential cloud service, which is keeping customer data in raw form in the three big cloud providers.
Data lakes are important storage units in modern cloud designs, he says. “Many interconnected services sit on top of the data lake, including databases, data warehouses, big data processing, and machine learning, to name a few. The execution of the architecture differs from company to company.”
According to the analyst, Amazon’s S3 (or Simple Storage Service) data lake service holds more than 100 trillion data items, or more than 13,000 for every person on the earth. He thinks that S3 is worth $1.5 trillion, which is about the current market value of Google’s parent Alphabet. Until 2030, according to Hasil, S3 may yield yearly growth rates over 40%. All three cloud infrastructure providers give solutions on top of their data lakes to properly exploit the information stored, as well, he says. In his view, “the strength of AWS, Azure, and GCP is that they have all the tools clients demand.”
There are significant variances in the underlying infrastructure of each of the three cloud platforms, despite how they seem to be comparable on the surface, Hasil notes. Distributed systems, big data, and machine learning are the foundations of both Amazon and Google’s businesses. He believes that Microsoft’s strength lies in its older technologies, such as the SQL server database.
It’s not that Snowflake and MongoDB aren’t valuable, but Redburn’s analyst regards them as having a limited range of potential customers than the Street consensus. “Snowflake and MongoDB are unable to create an ecosystem because of their focus on a single technology.” Market expectations may be too optimistic, according to Haissl. Snowflake and MongoDB’s stock-based pay is another source of worry for him.
The analyst explains, “The difficulty is two-fold.”Value and dilution of shareholders are the most important considerations. Secondly, the ramifications for the company’s overall structure and profitability. There are far-reaching ramifications for the company’s profit margin potential if stocks remain low for an extended period.
Amazon stock forecast is bullish on the news that Doug Herrington is the new CEO of Worldwide Amazon Stores
In a surprise move on Tuesday, Amazon announced Doug Herrington as the new CEO of its Worldwide Amazon Stores division. After Dave Clark’s resignation earlier this month, he was named CEO of Flexport, a logistics software company.
Since joining Amazon in 2005, Herrington has been in charge of the company’s North American Consumer division since 2015. He formerly held the post of CEO of the company KeepMedia, a firm that offered magazine subscriptions digitally. He was also the chief of marketing for Webvan, an online grocery service during the internet bubble period.
Amazon has also hired John Felton, who will report to Herrington as the company’s director of operations. About 18 years ago, Felton joined the firm. He took over when he was promoted to lead the Global Delivery Services division in 2019. According to CEO Andy Jacsy, in a blog post announcing the change, E-commerce is still an enormous development area.
The news was well received by investors and analysts. AMZN was trading in green on the day of the announcement, and Amazon stock forecast was increased by several points by analysts.
According to Jassy, “[W]e’re still in the early stages of what we can do.” Amazon only accounts for roughly 1 percent of the global retail market segment, and 85% of that market segment is still based on brick-and-mortar establishments. Long-term success requires persistence. We must remain laser-focused on offering the most excellent possible client experience (the most comprehensive variety, the lowest pricing, and quick and easy delivery) while also trying to improve our cost structure”.
Excess warehouse space could be a high cost for Amazon and bring down its stock forecast.
Amazon is experiencing excess space issues as sales seem to go down significantly this year. Amazon.com Inc. is looking to vacate or sublease at least 10 million square feet of warehouse space, as the multi-national company experienced slow sales during the first two quarters of 2022.
As per some reports, the exact excess space may be as much as 30 million square feet. While it may seem a lot of space, 10 million sq. ft. is roughly equal to Amazon’s 12 large fulfillment centers, or approximately 5% of additional space Amazon acquired on lease during the last 2 years.
Amazon rushed to significantly increase its warehouse capacity when online sales surged during the pandemic.
As the world moves towards a pre-pandemic scenario, however, Amazon has noted that millions of square feet of its warehouse space may prove out to be in excess in the near future. As a measure to cut costs due to excess space, which are expected to be around $10 billion, Amazon is now looking to find better alternatives.
The most obvious of these alternatives is to sublease or vacate this excess space.
As a result of this fall in sales, Amazon saw a decline in its net income during the first quarter of 2022, as its net income amounted only to $3.7 billion. To make things worse, the e-commerce giant expects to close its next quarter anywhere between a negative of $1 billion to a positive of $3 billion net income.
Amazon recently announced its massive plan to decrease overall warehouse space and a range of strategies to pursue it.
In some cities, it has already started the process of subletting extra space and/ or to terminate leasing agreements prematurely. It is also worth noting here that rent rates increased massively during 2021, when it rose to 17.6% in some territories, adding to the worries of Amazon’s CEO.
Stock plunge on disappointing Q1 2022, but analysts confirm their Amazon stock forecast at $3,680
The Q1 2022 earnings report has been a bit of a disaster for Amazon, where the company reported its first two-year loss as sales stalled and prices increased. While the announced revenues were close to the expected result, Amazon reported an EPS of -7.56B versus the 8.49 predicted. This led to the stock plunging by 14.05% after the announcement was made. One thing that contributed to this poor earning result was Amazon’s investment in Rivian, an electric car firm. Amazon controls 20% of the company, which lost over 50% of its value; resulting in Amazon suffering a loss of $7 billion.
Regardless of this significant loss attributed to Amazon’s acquisition of shares in Rivian, the company’s other business areas, such as cloud computing and advertising, continued to grow (as explained further below). That is why analysts haven’t changed their stock forecast, which is still set at over $4k. In addition, premium research firms, including MKM Partners and Truist Securities maintained their Buy rating; while Cowen & Co., BMO Capital, and Truist Securities, all kept their Outperform rating.
How advertising and AWS growth have contributed to influencing Amazon stock forecast favorably
Although Amazon is the dominant e-commerce platform, a portion of the corporation devoted to Amazon’s delivery services is losing money and needs significant financial investment. However, the company’s retail sector – which offers high margins and long-term development – gives access to a large customer base (Amazon’s website receives over two billion visitors every month), enabling the corporation to collect data for advertising purposes.
According to Zenith, the worldwide advertising industry will expand by 5.7 percent in 2023 and 7.4 percent in 2024. The United States will account for over half of that growth, providing Amazon with a considerable advantage.
Amazon’s ad business is growing rapidly. In 2021, ad revenue reached $31.2 billion. This was an increase of 58% compared to 2020 and a 146% increase from 2019.
Aside from these exciting projections, there is enough evidence that Amazon’s advertising is cost-effective. According to BusinessWire, 58 percent of businesses saw “excellent value” in Amazon advertising, while a Feedvisor survey revealed a seven-fold return rate.
And aside from advertising, Amazon’s cloud service accounts for less than 10% of sales but accounts for more than two-thirds of profits. So despite Microsoft (MSFT) and Google (GOOGL) gaining market share, AWS continues to control roughly one-third of this fast-expanding company.
AWS’s sales climbed by 37% in 2019. However due to the pandemic, growth slowed in 2020 and increased by 30%, but picked up again in 2021 with an expansion of 37%. AWS growth in Q4 was 40% greater than the previous year. AWS has also posted four consecutive quarters of growth. The cloud market is also expected to soon increase by double digits. According to Grandview Research, the CAGR will be 15.7 percent by 2030. During that time, the current market would have increased by 272 percent.
Amazon’s Acquisition of Electronic Arts Make Sense?
Significant acquisitions have been made recently by the retail titan.
Amazon has been active recently. The deal for Amazon to purchase 1Life Healthcare for $18 per share was finalized a month ago.
The acquisition of iRobot, makers of the Roomba vacuum cleaner, was announced earlier this month for a total of $1.65 billion.
Shares of Signify Health jumped earlier this week on news that Amazon was considering making an offer. Inexplicable, given that Amazon has just announced it would be ending Amazon Care.
A Swedish gaming agency said that Amazon is in talks to acquire Electronic Arts today, August 26. If this does happen, it will be on par with Microsoft’s purchase of Activision and will be a fantastic addition to Amazon’s cloud gaming service, Luna.
The Federal Trade Commission may expect a hectic period.
Five-year Amazon (AMZN) stock forecast price
A record closing price of $3,731.41 was set on July 8, 2021. However, inflation, quantitative easing, and rising interest rates contributed to a decline in the price, which continued through the end of the year and early 2022.
On January 27, investment bank BMO Capital Markets had lowered its Amazon price estimate by $800 (down from $4,100). However, since then, most Amazon stock predictions have indicated a price of at least $4,000 per share.
Tigress Financial raised its price objective from $4,460 to $4,655 on February 18. On March 10, Deutsche Bank analysts gave Amazon a ‘buy’ (previously you’ve capped ‘Buy’)rating and a target of $4,100 for their future stock, this followed the news of Amazon’s new salary policies.
JP Morgan, a US-based research firm, says stocks are currently undervalued. But, according to the company, “revenue growth will accelerate in Q2 due to reduced competition, the resumption of Prime 1-day/same-day perks, and price increases on Prime and FBA through 2022.”
The forecast predicts that Amazon’s spending will decline after two years of significant growth and increase its operating profit margins by 100 basis points. Amazon has quadrupled the capacity of its fulfillment network since the Covid-19 outbreak. JP Morgan expects to see a return on this investment by 2024.
According to Wallet Investor, Amazon’s stock price will rise by more than $5,000 in the long term, according to its long-term estimate. In late December, an algorithm-based online prediction tool indicated that Amazon’s stock price would rise to $3,708,315 and $4,346,483 within the decade. At the end of 2025, the stock can be valued at $5,631.56 and $6,357,492 in March 2027.
CoinPriceForecast’s predictions suggested the stock could reach $6,360 in 2030. The 2022 average price was $3,854, while the 2025 average price was $4,720.