Amazon's third-quarter results revealed earnings of $1.89 per share and revenue of $201.94 billion, both falling short of analyst expectations. The company's cloud division, Amazon Web Services (AWS), generated $45.98 billion, aligning closely with forecasts.
However, a significant outflow of $42.4 billion in free cash flow raised concerns about Amazon's heavy investments in artificial intelligence, particularly in its Amazon Bedrock service. Following the earnings report, Amazon's shares dropped nearly 7% in premarket trading.
Analysts from various firms, including Morgan Stanley and Deutsche Bank, suggest that the market reaction may be overly negative, emphasizing that AWS growth, while slightly below expectations, still indicates strong demand. Morgan Stanley's Brian Nowak maintained an overweight rating on Amazon, lowering his price target to $335 but noting a potential 37% upside.
Other analysts echoed similar sentiments, with price targets ranging from $317 to $390, highlighting the company's robust growth trajectory in AI and cloud services. Overall, while the immediate financial results were disappointing, the long-term outlook remains positive, with analysts encouraging investors to consider buying the dip