Wall Street liked what it saw in Amazon’s latest report.
Amazon (AMZN 6.19%) just impressed Wall Street with another strong earnings report.
The e-commerce and cloud computing giant delivered solid growth and expanding margins in its third-quarter earnings report. Revenue in the quarter rose 11% to $158.9 million, showing the company continues to gain market share in e-commerce. Revenue growth in Amazon Web Services, its cloud computing business, continued to reaccelerate following a lull earlier amid cautiousness about the economy.
The stock rose 6% on Friday on the news, and Wall Street greeted it with a raft of price target hikes, showing analysts expect the stock to continue to march higher over the next year.
Image source: Amazon.
Is Amazon going to $270?
Truist just upped its price target on Amazon to $270, implying more than 35% upside in the stock, and it maintained a buy rating on Amazon.
According to reports, Truist called out strength in Amazon’s international segment and expanding margins in North America and AWS.
Indeed, in its international segment, which had long been a money loser for the company, it just flipped a $95 million loss to a $1.3 billion profit, and its overall operating income jumped from $11.2 billion to $17.4 billion as its higher-margin businesses continue to scale up.
Is Amazon a buy?
Amazon is also ramping up spending on capital expenditures on AWS to prepare for increased demand from AI, and the company said it would spend $75 billion on capex this year, and more than that next year, exceeding its net income for both years.
However, the company is the leader in cloud infrastructure and needs to invest to maintain that position, especially as demand for AI is growing.
Amazon has built a strong network of competitive advantages, and its profits are growing because of the resilience of its higher-margin businesses, meaning it’s one of the few companies that can afford this level of investment.
For long-term investors, Amazon still looks like a buy, though getting to $270 in the next year might be a stretch.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Truist Financial. The Motley Fool has a disclosure policy.