Mizuho analysts have upgraded Amazon (NASDAQ:AMZN) to a Top Pick for the second half of 2023, citing accelerating demand for AWS’ generative AI products and services. Channel checks showed that AWS clients are shifting their savings from optimization to Gen-AI, which is both revenue and margin accretive.
The analysts believe that AWS revenue growth will likely trough in this quarter before starting a rebound in the second half of the year. They also expect a multiple expansion as concerns on AMZN’s AI-market-position diminish.
In a client note, the analysts said, “Case studies show that AWS wins over clients on intelligence privacy and data security. Furthermore, Gen-AI is priced meaningfully higher than conventional computing, so it is both revenue and margin accretive.”
As a result of the upgrade, the analysts raised the Amazon stock target to $160 per share. Amazon stock is up 0.6% in premarket Wednesday.