BofA highlights Amazon's strong growth potential in 2025 driven by AI and retail margins

From Investing.com: 2025-01-26 05:30:00

In 2024, Amazon stock outperformed the Nasdaq and eCommerce sector with a 44% gain, supported by an increased price-to-sales ratio. Bank of America analysts highlight AWS and retail margin growth as key drivers of Amazon’s success, with AI-driven cloud growth expected to remain a significant opportunity in 2025.

Retail margin expansion and ability to handle US dollar appreciation position Amazon for continued profit growth. BofA identifies several investment positives for 2025, including AI-demand cycle for AWS, retail margin efficiencies, and cost savings from robotics. Risks include new tariffs, investments in new areas, and competition from Walmart.

No new tariffs are expected to be signed on President Trump’s first day, with plans for a broad trade memo to study potential trade overhauls with China, Mexico, and Canada. BofA slightly lowers 2025 estimates for Amazon due to US dollar appreciation, adjusting International Revenue forecast by $7 billion.

BofA’s 2025 estimates for Amazon include revenue/profit/GAAP EPS at $700 billion/$79.5 billion/$6.10, slightly down from previous estimates. Despite adjustments, BofA expects Amazon to show stable revenue growth and better margin expansion relative to peers in the first half of 2025. The firm views Amazon as a strong play on AI.



Read more at Investing.com: BofA lists key positives and risks for 2025 By Investing.com