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Amazon stock rated as top pick amid strong AI demand

Amazon stock rated as top pick amid strong AI demand

Following a major slump in 2022, Amazon’s (NASDAQ: AMZN) stock has recovered sharply this year, thanks to a powerful combination of robust earnings, and the company’s expanding cloud business

But most notably, the exponential growth of the artificial intelligence (AI) field has led to Amazon shares receiving a major lift from Mizuho analysts on Wednesday, May 24. 

The financial experts upgraded AMZN to their ‘Top Pick’ for the second half of 2023, citing strong interest in Amazon Web Services’ (AWS) generative AI solutions. The analysts believe that AWS will witness a drop in revenue growth in the current quarter, before staging a powerful rebound in the second part of the year.

“Case studies show that AWS wins over clients on intelligence privacy and data security. Furthermore, Gen-AI is priced meaningfully higher than conventional computing, so it is both revenue and margin accretive. Due to strong demand, AWS clients are shifting their savings from optimization to Gen-AI.”

– Mizuho analysts wrote in the note to clients.

Further, Mizuho brokers hiked Amazon’s stock price target to $160 per share, which is more than 39% higher than the stock’s current price level. 

Amazon stock price analysis

At press time, shares of Amazon were trading at $115.34, climbing slightly in premarket trading after closing at $114.99 on Tuesday. 

The stock experienced a broad trading range in the past month from $102.05 to $118.40. During that period, AMZN gained over 8.3%. 

Year-to-date, the e-commerce and tech giant saw its share price soar by nearly 35%.

AMZN YTD price data. Source: Finbold

AMZN 1-year price forecast

Over the past 90 days, 51 analysts offered their views on AMZN, giving the stock a consensus rating of ‘strong buy.’ This is based on 38 analysts seeing the company’s shares as a ‘strong buy,’ 8 suggesting a ‘buy,’ and 4 advising a ‘hold.’ Meanwhile, just 1 analyst rated the stock as a ‘strong sell.’

1-year price forecast for AMZN. Source: TradingView

The financial experts also provided their 1-year price forecasts for Amazon, resulting in an average price target of $132.84, up more than 14% from the current price. 

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