Amazon (NASDAQ: AMZN) could have significant upside as artificial intelligence, cloud computing, and digital advertising create new growth opportunities.
That’s according to Goldman Sachs, which just added AMZN to its conviction list of preferred stocks, with a $375 price target. In fact, Goldman Sachs analyst Eric Sheridan sees potential drivers: growing demand for AI computing power and Amazon’s advertising business.
Amazon Web Services, better known as AWS, gives the company a way to benefit as businesses develop and run AI applications. Meanwhile, advertising and tighter cost control could help strengthen earnings.
Even better, it’s not just Goldman Sachs that’s bullish on AMZN lately. Analysts at Rosenblatt have a buy rating on the stock, with a price target of $360. The firm said “the market is treating agentic commerce as a binary threat to Amazon’s advertising economics, and the perceived disruption risk is overstated,” as reported by Investing.com.
Let’s start with Amazon Web Services, better known as AWS.
Businesses use AWS to access computing power, storage, databases, and other technology without building and maintaining all the necessary infrastructure themselves. Its cloud services let customers adjust capacity as their needs change, with many services available through usage-based pricing.
Artificial intelligence adds another reason for businesses to use that infrastructure. Developing an AI application is only the beginning. Once a company puts it into everyday use, it needs computing resources to keep the application running. A customer-service assistant, for example, must process new requests whenever customers interact with it.
That creates a potential source of ongoing demand. AWS also offers generative AI capabilities alongside its established computing and storage services. That gives Amazon opportunities to serve customers at different stages, from early development to broader deployment.
Advertising Adds Another Source of Growth
Advertising gives Amazon another opportunity to make more money from activity already happening across its business. Its Sponsored Products service, for example, allows advertisers to promote individual listings through ads that can appear in shopping results and on product pages. Advertisers pay when someone clicks.
The appeal is easy to understand.
Someone searching for running shoes or a coffee maker may already be considering a purchase. A relevant advertisement can help a seller reach that shopper close to the buying decision.
For Amazon, this creates an additional way to earn revenue from its shopping platform. The potential advantage is that advertising can complement retail activity. More useful product discovery could benefit shoppers and sellers, while successful campaigns could encourage advertisers to keep spending.
AMZN Stock Faces a Key Technical Test
AMZN stock is showing a more mixed technical picture despite the bullish Wall Street outlook. AMZN closed at $249.15 on the chart, below its 50-day simple moving average of $256.20. That moving average is now an important level for the stock to reclaim. A sustained move above roughly $256 to $260 could improve the near-term setup and put the recent highs around $280 back into focus.
Momentum, however, is currently weaker. The MACD is below its signal line, with the MACD reading at approximately -2.42 versus -2.10 for the signal line, while the histogram is negative. That indicates bearish momentum in the short term.
On the downside, the $245 area appears to be an important nearby support level, followed by the $240 region. A break below those levels could leave AMZN vulnerable to another move lower. For now, investors should watch whether Amazon can regain its 50-day moving average and turn the recent consolidation into a new move higher.
Why AMZN Deserves Attention
Cloud computing offers exposure to expanding technology demand. Advertising provides another source of revenue. In addition, better efficiency could help more sales reach the bottom line. Together, those opportunities explain the optimism.
Amazon’s growth story reaches well beyond online shopping. As businesses put artificial intelligence to work, AWS could benefit from ongoing demand for computing power. Advertising gives Amazon another way to generate revenue, while improved efficiency could help turn more of those sales into profits.
That combination helps explain Goldman Sachs’ bullish outlook and $375 price target. For investors, however, the strongest reason to watch Amazon stock is whether the company can consistently turn these opportunities into stronger earnings and cash flow. The potential is there. Delivering those results will determine whether AMZN can make the next move higher.
In addition, the approaching holiday shopping season could give Amazon another boost. According to Adobe Analytics forecasts cited by Seeking Alpha, online holiday spending is expected to climb 6.7% from a year earlier to a record $275.1 billion. Cyber Week alone could generate $47.5 billion, or 17.3% of the season’s total, with Cyber Monday accounting for more than $15 billion. For Amazon, that projected spending growth creates an opportunity to capture more sales as shoppers hunt for holiday deals.
