After a strong performance in 2023, the “Magnificent 7” stocks have had a mixed showing this year. While Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) are in the red, Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOG), and Meta Platforms (NASDAQ:META) have continued to rally. Amazon, in particular, is up nearly 19% year-to-date and is aiming for its all-time high. So, what’s driving Amazon’s rise, and how high can its stock go in 2024?
Analysts are bullish on Amazon, with a mean target price of $202.49, representing a 12% increase from current levels. The highest target price of $230 implies a 27.2% upside over the next 12 months. Analysts have raised their target prices for Amazon after its strong earnings reports, with the company beating expectations on both the top and bottom lines.
Amazon’s profits have soared, with a record net profit of $10.6 billion in Q4 2023. Operating income also surged, reaching $13.2 billion in Q4, nearly five times higher than the previous year. The company’s forecast for Q1 2024 is also impressive, with expected revenues between $138 billion and $143.5 billion, and operating income between $8 billion and $12 billion.
Several factors support the bullish outlook for Amazon. The company’s top-line growth has stabilized, including its Amazon Web Services (AWS) business, which saw a 13% YoY increase in Q4. Advertising revenue is also growing strongly, reaching $46.9 billion in 2023. Additionally, Amazon’s focus on generative AI and emerging business areas like Amazon Business and its pharmacy business should drive revenue growth.
Furthermore, Amazon’s focus on efficiency and operating leverage has improved its profitability and cash flows. The company’s NTM PE multiple of 42.8x seems reasonable, considering the 47% earnings per share growth expected in 2024.
In conclusion, while Amazon’s stock has already seen a significant increase in 2024, there is still room for growth. With a strong growth outlook and reasonable valuations, Amazon is well-positioned to continue its upward trajectory in 2024.
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Author Stephanie Bédard-Châteauneuf 
