Goldman Sachs analysts upgraded their outlook for Amazon (NASDAQ:AMZN), driven by anticipated growth in operating income due to stronger margins.
In their latest note, analysts pointed to three crucial factors expected to impact Amazon's Q2 2024 results: the health of the consumer market, improvements in operating income margins, and the growth trajectory of AWS revenue.
Despite some weaknesses in the UK and Germany, Amazon's eCommerce business has shown resilience in Q2, according to Goldman Sachs.
The analysts foresee significant potential for Amazon to outperform in 2025 and beyond, primarily due to higher retail margins and increased contributions from advertising.
They also maintain a positive long-term outlook for international margins and expect AWS profitability to remain robust. Goldman Sachs anticipates a reacceleration through 2024, as previous headwinds around optimization and workload migration shift to tailwinds, with AI workloads providing additional momentum.
As a result, the investment bank has raised its 12-month price target for Amazon from $225 to $250, reaffirming its Buy rating.