Amazon.com stock climbed to a record high on Tuesday, and analysts said investors could expect the good times to keep going in 2025.
Shares of the e-commerce company closed 1.2% higher to a record $238.15, according to Dow Jones Market Data. The highest the stock traded during Tuesday's session was $241.77, a new intraday high. Tuesday's gains pushed Amazon's market cap to $2.504 trillion by the end of the session.
The stock's strong performance could reflect investor optimism ahead of Amazon's fourth-quarter results, which are slated for release on Feb. 6. Analysts surveyed by FactSet remain bullish: The average call among nearly 100 ratings is Buy or the equivalent.
Wedbush analysts reiterated a Outperform rating on the stock on Tuesday while lifting their target for the price to $280 from $260. The new price target suggests a potential upside of 16%.
Despite the overwhelmingly positive consensus view, Wedbush analysts expect Amazon stock to rocket even higher. The firm said Wall Street was too conservative following an exceptional year of profit growth.
"While the bar is higher this year, we think Amazon is positioned to outperform expectations again in 2025, and our full year operating income estimate is 5% above consensus," the analysts wrote.
Wedbush also raised its forecast of fourth-quarter operating income to $20.7 billion from $19.9 billion, 9% ahead of the consensus call on the Street.
While Amazon's Project Kuiper satellite initiative, which is set for its first launch later this year, should contribute to expense growth in 2025, the analysts argued that the trajectory for costs is manageable. At the same time, they said, the company is working to increase monetization of its Fulfillment by Amazon service, even after management vowed not to raise fees this year.
Wedbush also sees limited risk from Amazon's spending on AI, saying "the company has a number of levers in place to offset strategic investments."
In a Tuesday note, Morgan Stanley analysts identified several opportunities for longer-term gains. The firm rates Amazon stock at Outperform with a $280 price target.
Amazon stock gained 2.1% on Monday, vastly outperforming the Nasdaq, which fell 3.1% as tech stocks broadly slid. The declines came after an artificial intelligence chatbot from DeepSeek, a Chinese start-up, surpassed ChatGPT as the most downloaded free application on Apple's App Store.
DeepSeek's highly efficient model is a sign that the cost of training generative AI models is set to decline substantially, leading to faster generative-AI product innovation and greater availability, Morgan Stanley analysts wrote.
In their view, this should benefit Amazon and peers such as Meta Platforms, Alphabet, and Microsoft. Falling costs for computing and greater adoption of AI should boost returns on capital from the technology for the internet and software sectors, the Morgan Stanley analysts said.
Amazon's stock price has steadily ticked higher following the Nov. 5 election, gaining nearly 20%. The S&P 500 has gained 4.9%, while the Dow Jones Industrial Average and Nasdaq Composite have risen 6.2% and 7%, respectively.
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