"Value Isn't Created by Expectations": Analysts Advise Buying Amazon Stock on a Pullback

E-commerce giant Amazon disappointed investors with its quarterly results: The company’s earnings fell short of analysts’ forecasts, revenue also missed the consensus estimate, and free cash flow for the 12 months ending in September turned negative. However, Wall Street remains optimistic about the company’s prospects, according to CNBC.

Amid growing concerns about the return on big tech companies’ massive investments in AI, Amazon’s stock price fell nearly 7% in premarket trading on October 30, but after the market opened, they recovered slightly from the decline, though they still failed to move into positive territory. At the time of publication, they were down about 2%.

Analysts say investors should look beyond the company's latest financial results and large-scale expenditures, as there are signs that Amazon's corporate strategy—which focuses on AI—is beginning to pay off.

— Morgan Stanley maintained its “buy” rating on Amazon stock but lowered its price target from $350 to $335, which implies a 37% upside from Thursday’s closing price. “Revenue growth came in below expectations… but this is merely a deviation from forecasts. The $3.8 billion increase in revenue at Amazon Web Services’ [cloud] division compared to the previous quarter was the second-largest in the history of the cloud business,” noted Morgan Stanley analyst Brian Novak. All of this, he emphasized, “does not negate AWS’s potential for further acceleration and its long-term prospects.”

— Deutsche Bank has maintained its “buy” rating on Amazon stock. The price target of $325 implies a 33% increase from the stock’s most recent closing price. “We believe the negative reaction [from investors to the earnings report] stems from the fact that AWS growth came in below market expectations (39% versus 43% in the third quarter). However, the forecast for [AWS] revenue growth of more than 40% year-over-year points to predictable and accelerating demand that the company is already seeing, which should lead to higher forecasts over time,” Deutsche Bank notes.

— Bernstein: Buy rating on the stock, with a price target of $320. This estimate implies a 31% increase in the stock price relative to the last closing price. “It’s easy to be disappointed by Amazon’s quarterly report. Expectations have been raised so high that even the cold shower from competitors’ reports wasn’t enough to bring them down,” the bank noted. According to analysts, advertising revenue growth appeared weak, although when looking at the two quarters combined—taking into account the Prime Day sale—the trend was normal. Furthermore, despite the fact that AWS’s metrics fell slightly short of the ideal “40-40” model (40% revenue growth with a 40% margin), the cloud division picked up momentum, and management provided a strong long-term revenue growth forecast of over 40% annually through 2028. “Value is created by actual results, not expectations,” Bernstein noted.

— Barclays: recommends buying shares of the cloud giant with a price target of $365, implying 49.6% upside potential. According to the bank, Amazon is expanding its capacity faster than any other cloud provider, and its backlog of orders is growing at a record pace in monetary terms throughout 2026.

Bank of America also recommends buying Amazon stock, while lowering its price target from $320 to $317 (the new target implies 30% upside potential). Goldman Sachs analysts share a similar view on Amazon (they recommend buying the stock, though the target price has been lowered from $375 to $370). Overall, the overwhelming majority of Wall Street analysts recommend buying Amazon stock: 68 out of 70 experts support this view. Only two advise holding the stock in a portfolio.

Amazon disappointed investors with its quarterly results: the company’s earnings per share came in at $1.89, which was below the forecast of analysts surveyed by LSEG, according to CNBC. Revenue of $201.94 billion also fell short of the consensus estimate of $202.31 billion. Revenue from Amazon Web Services, the company’s cloud division, was largely in line with expectations at $45.98 billion.

In addition, the e-commerce giant reported a free cash flow outflow of $42.4 billion over the past 12 months, reflecting massive capital investments in the development of artificial intelligence.

This article was AI-translated and verified by a human editor