Amazon.com Inc. shares surged about 14% on Friday after the e-commerce and cloud giant reported stronger-than-expected quarterly earnings, prompting JPMorgan to raise its price target on the stock to $365 from $330.
The revised target implies nearly 40% upside from current levels, with the Wall Street brokerage saying Amazon's expanding margins, accelerating AI monetisation and resilient cash flows could drive the stock to fresh record highs.
The rally followed Amazon's quarterly results, which eased investor concerns over slowing cloud growth and mounting AI-related spending. Amazon Web Services (AWS), the company's cloud computing arm, posted revenue of $30.5 billion for the quarter, up 18.8% from a year earlier and ahead of analysts' expectations of about $29.7 billion.
AWS also generated operating income of $11.2 billion, translating into an operating margin of 36.7%, reinforcing its position as Amazon's biggest profit engine.
Ahead of the results, investors had questioned whether AWS was losing ground to rivals Microsoft Azure and Google Cloud. The earnings report, however, suggested cloud demand remains resilient despite intensifying competition.
JPMorgan said Amazon's strong operating cash flow gives it the financial flexibility to continue investing heavily in AI infrastructure and data centres without straining its balance sheet.
"While capital expenditure remains elevated, operating cash flow is more than sufficient to fund research, development and capacity expansion," JPMorgan analysts said while raising the stock's target price to $365.
The brokerage also highlighted Amazon's growing AI ecosystem as a key long-term growth driver. It noted that the company's proprietary AI chips, including Trainium 2 and Inferentia, are seeing increasing adoption, helping improve AWS profitability amid tight supplies and high costs of advanced GPUs.
ALSO READ: Bloomberg Delays Decision On Including Indian Bonds In Global Aggregate Index
JPMorgan further pointed to Amazon's strategic partnership with Anthropic as a catalyst for higher enterprise AI adoption on AWS, which it expects will support future cloud contract growth and valuation expansion.
Amazon shares climbed sharply following the earnings release, recovering losses from the past two months and moving closer to their record high.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.