Amazon.com, Inc. (NASDAQ:AMZN) is joining in on the “no hike” rally, rising just shy of 2%. This also comes on the heels of an analyst upgrade at Argus.
Despite Amazon stock tripling over the past five years, Argus analyst Jim Kelleher believes AMZN’s growth prospects are as sound as ever.
Kelleher argues that Amazon appears to be “accelerating more rapidly than the share price,” and indeed the company is forecast to grow earnings 358% this quarter.
Argus also upgraded the company from “hold” to “buy,” and raised its one-year price target to $935. So, with AMZN shares up 19% year to date compared to 6.6% from the Nasdaq Composite, when do you jump in and buy?
Well, according to Kelleher, Amazon stock is currently at “a favorable entry point.”
The business that is out in front of the rest and holding the torch is Amazon Web Services. AWS is growing at an exponential clip, increasing sales nearly 60% year over year in its second quarter. AWS is also pacing to make up 40% or more of Amazon’s total operating income this year. From Kelleher:
“We expect ongoing volatility in the shares, given the company’s sensitivity to the holiday shopping season and need to invest in growth initiatives such as AWS and Prime. Given the company’s indisputable franchise leadership, its ability to leverage its vendor relationships in the retail space, and its market dominance and superior growth in infrastructure-as-a-service, we believe AMZN warrants long-term accumulation in most equity accounts.”
AWS, for what it’s worth, isn’t the sole horse in this race. Oracle Corporation (NYSE:ORCL) recently unveiled its “Oracle Generation 2” cloud infrastructure, which allegedly delivers high performance at a low cost. And Oracle CEO Larry Ellison isn’t mincing words, auguring an end to Amazon’s dominance.
That said, it remains to be seen if Oracle can claw its way from the $171 million its cloud currently rakes in to the $2.9 billion AWS generates. I’m not holding my breath.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
