Amazon Stock Surges as Cloud Business Growth Exceeds Expectations
Amazon's stock price surged 15.32% on Friday to close at $271.58, following its second-quarter earnings report. Within hours of this jump, over a dozen banks raised their price targets for Amazon.
The trigger for this increase was Amazon's cloud business, which grew by 36.8% to $42.2 billion in the quarter, exceeding Wall Street expectations. This is the fastest growth in Amazon Web Services (AWS) in nearly five years, with its backlog reaching a staggering $496 billion, roughly 2.5 times last year's level.
Benchmark analyst Daniel Kurnos raised his target to $400 from $370 and kept a Buy rating, calling it one of Amazon's best quarters in at least 10 years. Other banks, such as JPMorgan, Rosenblatt, TD Cowen, Truist, and KeyBanc, also increased their targets to between $330 and $350.
However, not everyone is optimistic about Amazon's prospects. Benchmark attached a warning to its upgrade, highlighting the company's cash burn issue. Over the past 12 months, Amazon spent $7.6 billion more than it brought in, with Chief Executive Andy Jassy planning to spend about $220 billion this year on data centers and chips.