Amazon.com, Inc.’s stock forecast: next upside target at 270 USD

On February 6, Amazon.com, Inc. (NASDAQ: AMZN) announced strong Q4 2024 financial results. Despite this, the company’s stock price declined due to a weaker-than-expected outlook for Q1 2025.

This article provides a comprehensive analysis of Amazon.com, Inc., including a breakdown of its Q4 2024 earnings, a technical analysis of AMZN stock, and a forecast for 2025. We’ll also explore Amazon’s business model, investment risks, and expert predictions for its stock performance.

About Amazon.com, Inc.

Amazon.com, Inc. is one of the world’s largest technology companies. It was established by Jeffrey Bezos in 1994 in Seattle, US. Initially, the company specialised in selling books online but has since evolved into a multi-industry platform. Today, Amazon is engaged in e-commerce, provides cloud computing services through Amazon Web Services (AWS), manufactures electronics (such as Kindle and Echo), and develops media services, including streaming and content production. The company held its IPO on 15 May 1997, listing its shares on the NASDAQ under the ticker AMZN.

Amazon’s revenue streams

Amazon’s revenue is based on several key segments, reflecting the company’s varied, multisectoral operations:

• Online retail: selling goods directly on behalf of the company, including books, electronics, clothing, household appliances, and more
• Marketplace: providing the company’s platform to third-party sellers to sell their goods through its website. Amazon generates revenue from sales commissions, paid storage and delivery services and other seller support services
• Cloud computing (Amazon Web Services): this is the world’s largest cloud service provider. The service includes server rentals, data storage, big data analytics tools, and other cloud solutions. This segment generates Amazon’s highest profits compared to all other business areas
• Subscriptions (Amazon Prime and other services): providing access to streaming platforms (video and music), cloud storage, and other products. This category also includes revenue from subscriptions to other services, such as Kindle Unlimited and Amazon Music Unlimited
• Advertising: actively developing its digital advertising business, including income from placing advertisements on the platform, such as ads in search results. Revenue from these and other advertising services has increased significantly in recent years
• Offline retail stores: physical sales outlets, including Amazon Go and Amazon Fresh stores, Whole Foods Market supermarkets, and speciality book and electronics stores
• Electronics and technology sales: producing and selling its own products, including the popular Kindle eBooks, Echo smart speakers with Alexa voice assistant, Fire TV streaming boxes, and other technology products
• Other areas: less significant revenue streams, such as providing logistics services to third parties, acting as an intermediary in book publishing (Amazon Publishing), developing video games (Amazon Game Studios), income from the Twitch streaming platform, and other innovative projects

These diverse revenue streams enable Amazon.com, Inc. to remain resilient to changing market conditions and expand its influence across various sectors.

Amazon Q3 2024 financial highlights

Amazon ended Q3 2024 with gains across key financial indicators. Below is the main report data:

• Revenue: 158.9 billion USD (+11%)
• Net income: 15.3 billion USD (+54%)
• Earnings per share: 1.43 USD (+52%)
• Operating profit: 17.5 billion USD (+55%)

Revenue by segment:

• North America: 95.5 billion USD (+8%)
• Operating income (loss): 5.7 billion USD (+30%)
• International: 35.9 billion USD (+11%)
• Operating income (loss): 1.3 billion USD – in Q3 2023, the company posted a loss of 95 million USD
• Amazon Web Services (AWS): 27.4 billion USD (+11%)
• Operating income (loss): 10.4 billion USD (+49%)

All key financial metrics showed growth in Q3 2024. The international segment saw increased sales, but costs also rose concurrently. As a result, it remained the most vulnerable and could be the first to incur losses in the event of even minor economic disruptions.

The North American segment made the most significant contribution to the company’s total revenue but also incurred the highest costs.

The AWS remained Amazon’s most promising and profitable division, demonstrating sustained growth and strong profitability.

For Q4 2024, Amazon forecasts revenue between 181.0 to 188.0 billion USD, representing a 7-11% increase compared to the corresponding period in 2023. Operating profit is expected to range between 16.0 and 20.0 billion USD, up from 13.0 billion USD a year earlier.

Amazon Q4 2024 financial performance

Amazon ended Q4 2024 with gains in key financial indicators. The report highlights are as follows:

• Revenue: 187.8 billion USD (+10%)
• Net income: 20.0 billion USD (+88%)
• Earnings per share: 1.86 USD (+86%)
• Operating profit: 21.2 billion USD (+60%)

Revenue by segment:

• North America: 115.5 billion USD (+9%)
• Operating income (loss): 9.6 billion USD (+43%)
• International: 43.4 billion USD (+8%)
• Operating income (loss): 1.3 billion USD - в Q4 2023, the company posted a loss of 419 million USD
• Amazon Web Services (AWS): 28.8 billion USD (+19%)
• Operating income (loss): 10.6 billion USD (+48%)

In comments to the Q4 2024 report, Amazon’s management provided forecasts for 2025, focusing on revenue, operating profit, and capital expenditures. In Q1 2025, revenue is expected to range between 151.0 and 155.5 billion USD, below the consensus forecast of 158.6 billion USD. Operating profit for this period is projected at 16.0 billion USD, also falling short of analysts’ expectations.

The company also announced significant growth in capital expenditures, which could reach 105.0 billion USD in 2025. This is a noticeable increase compared to 77.0 billion USD in 2024 and more than double the 48.0 billion USD spent in 2023. The primary investment focus is on infrastructure, including AWS cloud business expansion and the development of AI solutions.

AWS is expected to remain Amazon’s key growth driver in 2025 due to a trend of companies shifting to cloud infrastructure, the end of the cost optimisation phase and growing demand for AI solutions. The company calls artificial intelligence a once-in-a-lifetime opportunity.

The data shows that Amazon is betting on AWS and AI development and investing heavily in infrastructure. However, a weaker-than-expected revenue and operating income forecast for Q1 2025 discouraged investors, negatively affecting the share value.

Amazon stock forecast for 2025

• Barchart: 45 out of 49 analysts rated Amazon stock as a Strong Buy, three as a Moderate Buy, and one as Hold, with an average price target of 261.82 USD
• MarketBeat: 43 out of 45 specialists assigned a Buy rating to the shares, while two gave a Hold recommendation, with an average price target of 260.52 USD
• TipRanks: 47 out of 48 professionals recommended the stock as a Buy, while one gave a Hold rating, with an average price target of 268.70 USD
• Stock Analysis: 24 out of 44 experts rated the stock as a Strong Buy, 19 as Buy, and one as Hold, with an average price target of 262.48 USD

None of the experts recommend selling Amazon shares.

Technical analysis and price scenarios

On the monthly timeframe, Amazon.com stock broke above the upper boundary of an ascending channel, signalling potential further growth equivalent to the channel’s width. Based on Amazon.com stock performance, the following price movement scenarios for 2025 could unfold.

The primary forecast for Amazon.com stock suggests further growth towards the 270 USD resistance level. This could begin from the current level, or the stock price may decline to the 200 USD support level and, following a rebound, head upwards to 270 USD. Given the company’s cautious outlook for Q1 2025, a correction towards 200 USD is highly likely.

The alternative forecast for Amazon.com stock implies a breakout below the 200 USD support level, which could push the share price down to 150 USD. This scenario could materialise if revenue growth in the AWS segment slows, reinforcing investor concerns about AI monetisation and high AI-related spending, which may not generate returns.

Risks of investing in Amazon.com, Inc. stock

Investing in Amazon stock should be weighed against factors that may adversely affect the company’s revenue. The key risks are listed below:

• Slower e-commerce growth: this area is the company’s primary revenue stream, and if growth rates decline (for example, due to market saturation or changes in consumer preferences), it could adversely affect Amazon’s financial position
• Competition: intensifying competition from other major market players, including Shopify Inc. (NYSE: SHOP), Target Corporation (NYSE: TGT), and Walmart Inc. (NYSE: WMT). To maintain its market share, Amazon must make significant efforts to counter international competitors’ platforms, such as products from Alibaba Group Holding Limited (NYSE: BABA)
• Rising inflation: if inflation in the US begins to rise again, Amazon will face higher costs for logistics, product delivery, storage, and wages, which may reduce its operating profit
• Regulatory risks: increased scrutiny from antitrust authorities and the introduction of new regulations (for example, in taxation and data privacy) could significantly impact the business. Companies like Apple Inc. (NASDAQ: AAPL) and Alphabet Inc. (NASDAQ: GOOG) have already experienced regulatory pressure
• Weakening demand for AWS: Amazon’s most profitable segment is the AWS division. If corporate clients reduce their spending on cloud services (e.g., during an economic downturn), it could substantially affect Amazon’s net profit

Conclusion

Amazon’s Q4 2024 report and 2025 forecast reflect the company’s strong long-term outlook and short-term challenges. While key business areas, including AWS, AI, and e-commerce, continue to drive growth, the Q1 2025 forecast fell short of expectations, particularly in revenue and operating income.

A significant increase in capital expenditures, potentially reaching around 105.0 billion USD in 2025, indicates that Amazon is aggressively investing in AI and cloud infrastructure development, with AWS being the primary growth driver. Although the AI boom presents vast opportunities, it also involves inflated costs, and close attention must be paid to how effectively the company can monetise these investments.

Despite market volatility, Amazon remains a top pick for growth-oriented investors, with analysts overwhelmingly recommending a Buy or Strong Buy.