BofA Securities has expressed continued confidence in Amazon.com (NASDAQ: NASDAQ:AMZN), maintaining a Buy rating and a price target of $210.00.
The endorsement follows news of a significant partnership between Amazon Web Services (AWS) and Intel. This collaboration involves a multi-year, multi-billion-dollar investment in custom chip designs, with Intel set to produce custom AI fabric chips for AWS using its most advanced process node, Intel 18A.
The custom chips, which are expected to begin production in 2025 based on Intel's previous announcements, are part of AWS's strategy to diversify its offerings.
Amazon has been proactive in providing a range of choices to AWS customers, including third-party large language models (LLMs) on Bedrock and a variety of third-party and first-party chips for different workloads.
The partnership with Intel is anticipated to offer cost-effective chip options compared to other alternatives.
Despite concerns about potential disruption from AI to AWS's leading position in the cloud market, BofA Securities believes that AWS is well-equipped to meet the growing AI demands of customers.
In other recent news, Intel Corporation (NASDAQ:INTC) has maintained its Peerperform rating by Wolfe Research following the announcement of a formal split of its manufacturing business. The move is intended to ensure independence and protect customers' interests.
Despite this, Wolfe Research does not view a complete spin-off of the manufacturing division as beneficial due to the high fixed costs and potential limitations on the chip company's flexibility.
Intel also announced a multi-billion-dollar supply agreement with Amazon, which includes an AI fabric and a custom Xeon CPU. Although seen as a positive development, the research firm suggests it may not significantly impact revenue.
In a separate development, Teresa Ribera, Spain's Minister for Ecological Transition, has been nominated as Europe's new antitrust chief. If approved, she will oversee decisions on multi-billion euro mergers and maintain stringent antitrust rules.
Furthermore, the Competition Commission of India (CCI) has found Amazon and Flipkart in breach of local competition laws, favoring specific sellers on their platforms. This finding could lead to further regulatory scrutiny and potential penalties for these e-commerce firms.
InvestingPro Insights
As Amazon (NASDAQ:AMZN) continues to expand its technological horizons with partnerships like the one with Intel for custom AI chips, investors are closely watching the company's financial metrics. According to InvestingPro data, Amazon boasts a massive market capitalization of $1.98 trillion, reflecting its dominant position in the market. The company's revenue growth remains robust, with a 12.32% increase over the last twelve months as of Q2 2024, signaling continued business expansion.
InvestingPro Tips highlight Amazon's notable position in the Broadline Retail industry and the company's ability to operate with a moderate level of debt while its cash flows can sufficiently cover interest payments. Additionally, analysts predict Amazon will be profitable this year, which is supported by a solid gross profit margin of 48.04% over the last twelve months as of Q2 2024. These factors contribute to BofA Securities' confidence in maintaining a Buy rating for Amazon's stock.
For investors seeking more in-depth analysis, there are over 11 additional InvestingPro Tips available that delve into Amazon's financial health and market performance. These tips provide a comprehensive view of the company's valuation multiples, profitability, and returns, which can be crucial for making informed investment decisions.
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