New developments in AI will undoubtedly have far-reaching consequences that we have yet to fathom. Amazon (NASDAQ: AMZN) has been a leader in artificial intelligence (AI) for many years, and it shows no signs of slowing down.
One Wall Street analyst thinks Amazon has more potential to grow, despite the stock's 82% year-to-date increase and record high on April 10.
At the heart of the artificial intelligence revolution DA Amazon stock might see a 26% increase in value from Wednesday's closing price to $235 according to Davidson analyst Gil Luria, who kept the buy recommendation and raised the price target
Based on the analyst's research, Amazon is well-positioned to capitalize on generative AI thanks to its investments in data centers and custom AI chips. Additionally, Amazon's retail profitability should see a recovery soon. In fact, the analyst goes so far as to say that Amazon is his "favorite mega-cap" stock.
Putting a lot of faith in the AI ace In my opinion, the analyst has arrived at the correct conclusion. Reports indicate that over the next fifteen years, Amazon will allegedly spend $150 billion on data centers. With its expanding portfolio of cloud tools, AWS will be able to gain a larger portion of the thriving artificial intelligence sector. This will provide them a significant advantage.
A study conducted by the McKinsey Global Institute estimates that generative AI would contribute value to the global economy ranging from $2.6 trillion to $4.4 trillion in the next years. A large portion of that will originate from cloud services, particularly AWS.
In addition, a cursory examination of Amazon's financials shows that profitability has been on the rise as year-over-year net sales growth has accelerated in all four of the previous quarters. The retail drought has ended, and Amazon's prior attempts to reduce costs have clearly paid off.
In conclusion, investors can get a lot of AI-powered upside from Amazon at a reasonable price, especially when compared to its "Magnificent Seven" competitors, all while trading at three times forward sales projections. At its all-time high, the stock is still a good investment because of it.
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