HSBC expects Amazon shares to rise 17% thanks to a key catalyst. It's not AI

Amazon will develop not only at the expense of AI, according to HSBC analysts. They forecast a 17% rise in the tech giant's shares thanks to a bet on the service for fast delivery of products. This could significantly increase Amazon's market share in the e-commerce segment and boost revenue per Prime subscription user.

HSBC reiterated its recommendation to buy Amazon shares and raised its target price from $256 to $260, MarketWatch reports . HSBC analyst Paul Rossington attributes growth expectations to the expansion of the fast grocery delivery service.

Amazon remains a focus for investors, even though its stock has lagged behind the other "Magnificent Seven" companies this year, whose quotes are supported by a focus on AI. That said, a major new revenue stream for Amazon could be the development of e-commerce with a focus on the online grocery segment and a same-day delivery strategy, Rossington predicts. The company already delivers groceries to 1,000 U.S. cities and plans to cover more than 4,000 locations by the end of 2025. The HSBC analyst estimates that expanding fast delivery will increase not only the average check per customer, but also the frequency of orders, which will strengthen the loyalty of Prime users.

Betting on this trend has a fundamental basis. Emarketer forecasts that the U.S. food delivery market will reach $220 billion by the end of 2025 and will grow at an average annual rate of 7.5% through 2028.

Walmart currently holds the lead in the US online grocery market with a 32% share, while Amazon has only 23%. However, HSBC analysts believe that through a combination of a broad Prime base of about 130 million subscribers and low-margin but scalable delivery, the company is able to gradually displace Walmart. They called Amazon's key advantage the ability to offset the low profitability of the grocery segment by selling higher-margin products.

In addition, Amazon is investing in logistics and supply chain optimization. Using robotization and automation in fulfillment centers, opening new warehouses and innovations allow the company to reduce costs and speed up delivery. According to Rossington, its speed has increased by 30% in a year, while costs have fallen.

Morgan Stanley's assessment of the fast food delivery market is even more optimistic. The bank's analyst Brian Novak recently called Amazon's stock a "Top Pick," noting that the market for fresh and perishable food in the U.S. could exceed $600 billion as early as 2026. Each additional percentage point of market share in this category could add about 120 basis points of sales growth for Amazon.

Of the 72 analysts who gave forecasts on the dynamics of the company's shares, no one advises to sell them, and only three recommend to hold, follows from the data of MarketWatch. The remaining ratings on these securities are "buy." The average target price is $265, up 19% from current levels.

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