The online retail giant actually posted an eight-figure loss this most recent quarter, but its high-profit cloud computing business is causing investors to flock to the company in droves.
On the face of it, Amazon didn’t have that great of a first quarter for 2015: it reported $57 million in net losses. But that didn’t stop its stock from jumping 14 percent to $445.10 in just one day on Friday — and analysts say it could be headed for the stratosphere.
Why? It’s all about what’s down the line, and things are looking up for the online retail giant, as CEO Jeff Bezos’ early investments are starting to pay off big time, according to a Forbes report.
At the forefront of its brand new business sectors as it looks to branch beyond retail is Amazon Web Services (AWS), its cloud computer business segment that was launched nine years ago and could reach $5 billion in business by the end of this year — and that’s just the beginning.
Investors are betting big on the company, and the positive news cause some to guess that Amazon could rise by another 20 percent to $535 per share — a pretty amazing rise for a company that was trading at $303.83 exactly a year ago.
AWS posted a revenue growth of about 50 percent. It makes up only a small portion of Amazon’s total business, but its potential and profit margins that has investors salivating.
Analyst rating service Thomas/First Call monitored 36 brokers who have pegged the high target for the stock at $535, which would be a 20.19 percent increase over Friday’s already astronomical closing price. JP Morgan also upgraded its recommendation of Amazon stock, boosting it from “neutral” to “outperform” with the same price target. Nomura was a bit more conservative, but even they were calling for a $490 price target, and Raymond James put it at $485.
