Bank of America resets Amazon stock price target ahead of earnings

Amazon evolved from 1 of the world’s largest online retailers into a tech powerhouse and a hyperscaler.  Amazon Web Services (AWS), a unreality computing platform, became the astir important portion of its concern acknowledgment to the artificial quality boom.

The backbone of Amazon’s AI strategy is its custom-made Trainium AI accelerator chips, designed successful concern with Marvell (MRVL).

Amazon reported its Q4 net connected Feb. 5. The banal took a dip, closing 5% little connected the adjacent day, according to Yahoo Finance.

What alarmed immoderate investors was Amazon President and CEO Andy Jassy’s connection successful the net release. “With specified beardown request for our existing offerings and seminal opportunities similar AI, chips, robotics, and debased world orbit satellites, we expect to put astir $200 cardinal successful superior expenditures [capex] crossed Amazon successful 2026, and expect beardown semipermanent instrumentality connected invested capital.”

The investors weren’t the lone ones to respond negatively to the earnings. Bank of America lowered its Amazon banal terms target.

• Net income are expected to beryllium successful the scope of $173.5 cardinal to $178.5 billion.

• Operating income is expected to beryllium successful the scope of $16.5 cardinal to $21.5 billion.
  Source: Amazon net report

Amazon volition study its Q1 2026 net connected April 29. The institution precocious made immoderate cardinal moves to amended its unreality services and AI strategy.

Amazon joined OpenAI’s latest backing circular successful February.

The institution has pledged up to $50 cardinal of concern successful OpenAI, starting with $15 billion.

Its FORM 8-K reveals that the woody has the pursuing caveats: “Amazon Sub is obligated to acquisition each remaining Commitment Shares upon the earlier to hap of (i) OpenAI gathering specified milestones, and (ii) OpenAI straight oregon indirectly consummating an archetypal nationalist offering oregon nonstop listing of equity securities successful the United States (a “Public Listing Transaction”), successful each lawsuit taxable to definite presumption and conditions.”

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Investing successful OpenAI isn’t without hazard and raises questions astir circular financing. The companies person besides expanded their existing $38 cardinal statement by $100 cardinal implicit 8 years. OpenAI has committed to consuming astir 2 GW of Trainium capableness done AWS infrastructure.

The institution besides improved its determination infrastructure.

In a akin deal, Amazon expanded its concern with Anthropic.

Amazon said it volition put $5 cardinal successful Anthropic and up to an further $20 cardinal successful the future. Anthropic volition unafraid up to 5 gigawatts of existent and aboriginal generations of Amazon’s Trainium chips to bid and powerfulness its AI models.

This means Anthropic has committed to spending much than $100 cardinal implicit the adjacent 10 years connected AWS technologies.

AWS improved its Amazon Elastic VMware Service (Amazon EVS). EVS present offers Microsoft Windows Server licensing entitlements. This enables its users to migrate oregon make caller virtual machines (VMs) moving Windows Server OS successful EVS and get Windows Server licensing entitlements for those VMs from AWS.

Bank of America expert Justin Post and his squad updated their sentiment connected Amazon banal up of earnings.

The squad estimates Q1 gross and EBIT of $178.4 cardinal and $21.4 billion, respectively, which they enactment is supra Wall Street statement astatine $177.1 cardinal and $20.7 billion, respectively. Analysts raised their year-over-year maturation estimates for AWS to 28%, supra the Wall Street statement of 25%. They added that expectations could scope 29%, driven by Anthropic-related revenues.

Related: Goldman Sachs resets Broadcom banal forecast

Post said AI revenues whitethorn beryllium dilutive to wide margins, which is simply a hazard for the quarter, but January layoffs and beardown halfway AWS margins could offset. The squad expects the institution to supply gross guidance for Q2 of $185 cardinal to $190 cardinal and operating income guidance of $17.5 cardinal to $21.5 billion.

In a probe enactment shared with me, Post reiterated a bargain standing for Amazon banal and raised the people terms to $298 from $275, based connected his sum-of-the-parts investigation that values AWS astatine 9x 2027 income estimates, first-party retail astatine 1.0x, third-party retail astatine 2.5x, and advertizing astatine 5.0x.

• Increasing contention from offline and section retailers

• Market stock nonaccomplishment to unreality competitors with precocious AI technology

• Elevated AWS concern needs that could unit margins

Analysts besides noted that the banal has been taxable to important volatility successful the past, and that volatility could summation amid economical uncertainty.

Related: Bank of America revamps AMD banal terms target

This communicative was primitively published by TheStreet connected Apr 21, 2026, wherever it archetypal appeared successful the Investing section. Add TheStreet arsenic a Preferred Source by clicking here.