Jefferies Raises Amazon’s Stock Price Target Amid AI Concerns

Amazon Inc. (NASDAQ:AMZN) has found itself amidst intense scrutiny and speculation within the financial world, primarily driven by its perceived lag in artificial intelligence development compared to rivals like Microsoft and Google. This skepticism hasn’t deterred Jefferies, however, which recently boosted its target price for Amazon’s stock from $275 to an ambitious $300, maintaining a bullish Buy rating.

The hedge fund experts at Jefferies have pointed out that despite a challenging year for Amazon in 2025, characterized by an overwhelming negative investor sentiment, the company’s significant foothold in the cloud computing arena via Amazon Web Services (AWS) positions it well for a strong rebound. As the industry shifts focus from AI model training to crucial inference and production workloads, Amazon’s capabilities are anticipated to come into sharper focus.

Recent reports indicating that AWS revenue growth surged from 17% in the first half of 2025 to an impressive 20% in the third quarter underline this optimism. Projections suggest continued acceleration towards mid-20% growth in 2026, with robust margins expected to hover in the mid-30% range, ensuring continued profitability for this critical segment of the company.

On a broader scale, Jefferies forecasts a moderated overall revenue growth rate of around 10% for 2026, a slight decrease from the approximately 12% experienced in 2025. This expectation accompanies a forecast for enhanced operating leverage, with operating margins predicted to expand from 11.2% in 2025 to approximately 12.3% in 2026.

The valuation at nearly 12x the estimated 2026 EV/EBITDA reflects Jefferies’ belief in Amazon’s potential for robust growth and sustainable profitability— a sentiment echoed across the analyst community. Almost all of the 74 analysts monitoring Amazon’s performance assign it a Buy or equivalent rating, and the stock has seen an uptick of over 7% by the first week of 2026. Market consensus still anticipates a rally of an additional 21%, potentially elevating Amazon’s market capitalization above the staggering $3 trillion mark.

In addition to its core e-commerce business, Amazon.com Inc. diversifies its ventures across digital content, advertising, and cloud computing, with AWS dominating as one of the globe’s most expansive data center networks. Amidst their bullish outlook for AMZN lies acknowledgment of other AI-intensive stocks that may present superior upside potential with comparatively lower downside risk. Investors are urged to consider these alternatives, particularly amid evolving tariffs and the trend towards domestic onshoring, which may redefine the competitive landscape significantly.

In summary, while Amazon continues to bolster its cloud computing operations and navigate investor concerns surrounding AI advancements, the evolving market dynamics and favorable growth projections may soon alter the narrative surrounding this tech behemoth.

Source: finance.yahoo.com/news/jefferies-sees-amazon-amzn-well-165852356.html