One hyperscaler's rally is just getting started, Wolfe Research says
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Amazon is likely to gain ground as it expands thanks to several artificial intelligence-linked initiatives, including its cloud service Bedrock, according to Wolfe Research. The research firm has an outperform rating on the hyperscaler and raised its price target to $320 from $315, or nearly 26% above the price where shares closed Tuesday. "We remain optimistic on Amazon's competitive position as a hyperscaler," analyst Shweta Khajuria wrote Wednesday in a note to clients. "We have a bullish long-term view on the hyperscaler debate – Amazon should see sustained topline growth even if the market shifts towards open-weight models, given Bedrock's value [proposition], and we think Amazon is investing from a place of strength against elevated demand." Amazon Bedrock is a cloud service on Amazon Web Services that enables developers to build generative AI applications. Wolfe Research estimates that Bedrock margins will surpass 50% in 2027. AMZN 6M mountain Amazon is ahead almost 20% in the past six months Separately, strong demand for generative AI is likely to offset headwinds in several other Amazon businesses, according to Wolfe. That, in turn, should help lift the stock, Khajuria said. "We expect investments to support sustained demand for GenAI, supply chain management in Retail to offset margin pressures from elevated inventory, sustained share gains in eCommerce driven by accelerating delivery speeds and further mix shift to everyday essentials, and supporting growth catalysts in the form of Prime Video, Grocery, Kuiper, Alexa+, and Amazon Logistics -- to name a few," the analyst wrote. Wolfe Research's call matches the consensus on Wall Street, where 62 of 66 analysts rate Amazon a buy or strong buy, with only four holds, LSEG data shows. Shares are up almost 20% in the past six months.