Investment Prospects for Amazon and Booking Holdings
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy AMZN?
Source: NASDAQ.COM
- Amazon's Innovation Edge: Amazon's online retail business maintains a durable competitive advantage through its extensive infrastructure and same-day delivery services, with its Rufus AI shopping assistant reaching 250 million active users in Q3 and projected to generate $10 billion in incremental annual sales by 2025.
- Advertising Revenue Surge: Amazon's advertising services have achieved an annual revenue run rate of $85 billion, with Q4 ad revenue increasing by 22% year-over-year, positioning the company to benefit as brands shift ad spending to digital platforms.
- Cloud Service Profitability: Amazon Web Services (AWS) saw a 24% year-over-year revenue increase in Q4, contributing roughly half of the company's profits, with investments in custom chips and data center capacity keeping it at the forefront of AI services, and analysts expect earnings per share to grow at an annualized rate of 17% in the coming years.
- Booking Holdings' Market Position: Booking Holdings attracts users through loyalty rewards and its Connected Trips initiative, achieving 323 million room nights in Q3, an 8% year-over-year increase, driving a 13% rise in revenue, with management targeting an 8% annual growth rate moving forward.
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Analyst Views on AMZN
Wall Street analysts forecast AMZN stock price to rise
47 Analyst Rating
46 Buy
1 Hold
0 Sell
Strong Buy
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
Current: 199.600
Low
250.00
Averages
294.69
High
340.00
About AMZN
Amazon.com, Inc. provides a range of products and services to customers. The products offered through its stores include merchandise and content it has purchased for resale and products offered by third-party sellers. The Company’s segments include North America, International and Amazon Web Services (AWS). It serves consumers through its online and physical stores and focuses on selection, price, and convenience. Customers access its offerings through its websites, mobile apps, Alexa, devices, streaming, and physically visiting its stores. It also manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, Ring, Blink, and eero, and develops and produces media content. It serves developers and enterprises of all sizes, including start-ups, government agencies, and academic institutions, through AWS, which offers a set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Financial Results: Despite narrowly missing earnings expectations, Amazon reported a 14% year-over-year revenue increase to $213 billion in Q4, driven by robust growth in advertising and cloud computing, highlighting the company's competitive position in rapidly growing markets.
- Capital Expenditure Plans: Amazon plans to increase capital expenditures to $200 billion by 2026, a 56% rise from $128 billion in 2025, raising investor concerns about the company's financial health, particularly regarding its significant investments in AI infrastructure.
- Accelerating Cloud Growth: Amazon Web Services (AWS) saw a 24% revenue increase in Q4, the fastest growth in 13 quarters, with CEO Andy Jassy noting that the custom chip business has surpassed a $10 billion annual revenue run rate, indicating that AI investments are beginning to yield returns.
See More
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- Consumer Spending Data Focus: This week's highlight will be the Personal Consumption Expenditures (PCE) report on Friday, which will provide insights into consumer spending in December and inflation trends, especially following last week's unexpected slowdown in the Consumer Price Index (CPI).
- Corporate Earnings in Spotlight: Walmart (WMT) is set to release its fourth-quarter earnings on Thursday, marking the first report under new CEO John Furner, making it a key indicator of consumer spending that the market is eagerly anticipating.
- Ongoing AI Impact: As AI tools' potential effects intensify across various sectors, software stocks like Salesforce (CRM) and ServiceNow (NOW) have seen significant declines, reflecting the market's heightened vigilance regarding AI disruptions, necessitating close monitoring of future industry developments.
See More
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- New Architecture Driving Growth: Nvidia's upcoming Rubin chip architecture offers significant efficiency improvements over the previous Blackwell generation, requiring only one Rubin chip for every four Blackwell chips for AI model training, which will encourage more companies to upgrade their GPUs, thus driving sustained growth for Nvidia.
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See More
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- Stock Decline: Since the beginning of 2026, Amazon's stock has fallen over 5%, with a 10% drop following its fourth-quarter earnings report, leading to a current decline of about 20% from its all-time high, indicating investor concerns about future performance.
- Strong Earnings: Despite the stock drop, Amazon reported fourth-quarter revenue of $213.4 billion, a 14% year-over-year increase, with operating income of $25 billion, surpassing expectations, particularly with AWS achieving 24% growth, showcasing robust performance in its cloud computing segment.
- Surge in Capital Expenditures: Amazon's forecast of $200 billion in capital expenditures for 2026, significantly higher than the $132 billion spent in the past year, raised market concerns, contributing to further stock declines as investors demand solid returns on this massive investment.
- Future Growth Potential: If AWS growth continues to accelerate, Amazon could rebound in 2026, potentially pushing its stock back above the historical high of $260; however, any slowdown in AWS revenue growth could pose downside risks for the stock.
See More
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- Surge in Capital Expenditures: Amazon estimates its capital expenditures will reach $200 billion in 2026, a 56% increase from $128 billion in 2025, primarily aimed at developing artificial intelligence infrastructure, which could impact short-term profitability.
- Strong Cloud Growth: Despite stock price pressures, Amazon Web Services (AWS) reported a 24% revenue increase in the fourth quarter, the fastest growth in 13 quarters, indicating strong demand for AI tools and services.
- Investment Return Outlook: Although the stock has recently declined, Wall Street analysts believe Amazon's shares are significantly undervalued, with earnings expected to grow at 15% annually through 2027, making the current price-to-earnings ratio of 28 times appear reasonable.
See More
