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<Research> JPM Raises Amazon (AMZN.US) Cloud Business Growth Forecast, TP Raised to USD280
JPMorgan has raised its forecast for Amazon's (AMZN.US) Amazon Web Services (AWS) growth for the first to third quarters of this year by 2% to 3%, and increased next year's growth ...
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<Research> JPM Raises Amazon (AMZN.US) Cloud Business Growth Forecast, TP Raised to USD280
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JPMorgan has raised its forecast for Amazon's (AMZN.US)      Amazon Web Services (AWS) growth for the first to third quarters of this year by 2% to 3%, and increased next year's growth rate by more than 4%, primarily driven by the migration of traditional workloads to the cloud and increased AI adoption. The firm forecasts AWS growth to range between 28% and 30% for all four quarters of this year, maintaining a 26% growth rate for next year.

The firm noted that AWS has expanded its partnership with OpenAI to a USD138 billion commitment over eight years, expecting AWS's order backlog to increase by more than USD100 billion QoQ in the first quarter. In terms of costs, the prices of New York oil futures, diesel, and retail gasoline have surged sharply in recent weeks. Amazon has some fuel supplies under contract or mixed contracts, which should alleviate some related pressures. However, the rise in fuel prices is expected to impact operating profit by approximately USD125 million and USD400 million in the first two quarters of this year, with an annual impact of about USD1.5 billion, assuming about half of Amazon's fuel supply prices are affected by spot prices. Additionally, Amazon is investing in international pricing and fast e-commerce businesses, particularly in emerging markets, which may pressure international operating profits. The strengthening USD has also weighed on Amazon's net sales.

The firm has lowered its forecast for Amazon's operating profit this year by 1% to USD94.5 billion, but raised next year's forecast by 3% to USD122 billion. For the first quarter, the total operating profit is projected at USD20.6 billion, with the company's guidance range between USD16.5 billion and USD21.5 billion, and USD95.5 billion for the full year. As AWS expands its leading advantage in the AI field, the improvement in demand trends is encouraging for the firm. Despite the short-term pressure on net operating profit trends due to rising fuel prices and international investments, the firm remains optimistic about Amazon's medium-term profit margin expansion trajectory. The firm has raised Amazon's target price from USD265 to USD280, maintaining an "Overweight" rating. (fc-ec/j)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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