Amazon (NASDAQ: AMZN) stock jumped nearly 14% on July 31 as the news of another explosive quarter punctuated this month’s rally and eased investor concerns in regard to the company’s artificial intelligence (AI) strategy.
The shares are now up 12.6% on the monthly chart, meaning a $1,000 investment in the retail leader at the start of July, when the stock was changing hands at $241, would now be worth about $1,120, the price having gone up to just shy of $268.
Assuming the same investment was made at the start of the year, the position would now be valued at more or less $1,189, following Amazon’s year-to-date rally of around 19%.
Looking at the quarterly results, the rally appears primarily driven largely by Amazon Web Services (AWS), which outperformed expectations despite growing competition from Microsoft Azure and Google Cloud. Indeed, AWS revenue increased 18.8% year-over-year to $30.5 billion, ahead of Wall Street estimates of $29.7 billion.
Operating income was also noteworthy, reaching $11.2 billion, resulting in a 36.7% operating margin and accounting for more than 60% of Amazon’s total operating profit.
Together, the results highlighted Amazon’s progress in AI infrastructure, which was just what the investors were hoping for, with the company expanding deployment of its in-house Trainium 2 and Inferentia AI chips.
Amazon stock rallies as Wall Street grows more optimistic
A strategic partnership with Anthropic has also become an important growth driver, giving Amazon access to advanced AI models directly through AWS.
JPMorgan noted Amazon’s strong operating cash flow provides ample support for heavy capital spending on data centers, research, and AI infrastructure without compromising its financial position, which should boost such partnerships in the future.
The bank accordingly raised its price target on Amazon to $365 from $330, implying roughly 40% upside from current levels.
Several other firms were quick to react as well. For example, Pivotal Research lifted its 12-month price target for AMZN shares to $333 from $320, representing a 4.06% raise, while TD Cowen increased its own target to $350 from $340.
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