Amazon.com, Inc (AMZN) shares have room to move higher as Amazon Web Services (AWS) reaccelerates in the fourth quarter as the broader rollout of the company’s Bedrock generative AI product is expected to drive more demand later this year, UBS analysts said in a note published on Wednesday.
As a result, they boosted their target price on Amazon stock to $150 per share from $130, while maintaining a ‘Buy’ rating, acknowledging the company’s valuation has run but with room for further expansion.
The analysts said increasing demand, particularly as Bedrock expands, should drive acceleration in 4Q, as their channel contacts expect AWS to catch up quickly in its LLMs (Large Language Models) and AI-focused chips, which should see plenty of demand regardless given shortages.
“AMZN will benefit from incumbency status because enterprises are already trained on AWS and store data with (the company), and using AMZN's genAI products will help companies move up to higher commitment thresholds and thereby secure better discounts,” they wrote.
Amazon Bedrock, which is currently in Beta mode, makes pre-trained foundational models (FM) from AMZN as well as from startups, including AI21 Labs, Anthropic, Stability AI, available via an application programming interface (API) as an AWS managed service, according to the analysts at UBS.
Shares of Amazon.com have gained 45% year to date.
Contact Sean at sean@proactiveinvestors.com