Bank of America Urges Investors to Buy Amazon Stock Ahead of Q4 2025 Earnings Report
- Why Is Bank of America Bullish on Amazon?
- How Does AWS’s AI Strategy Impact Amazon’s Valuation?
- What’s Driving Amazon’s Retail Profit Surge?
- Why Does Amazon’s Nigerian Satellite License Matter?
- How Does Amazon’s Valuation Compare to Tech Peers?
- What Are the Risks to BofA’s Thesis?
- Which Other Stocks Did Bank of America Recommend?
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Bank of America has issued a bullish recommendation for Amazon (AMZN) ahead of its Q4 2025 earnings release, citing undervaluation due to AWS uncertainty and strong retail growth potential. Analyst Justin Post highlights Amazon’s AI-driven cloud expansion, retail optimization, and a new Nigerian satellite license as key catalysts. With EPS expected to rise 30% YoY and shares lagging the S&P 500, BofA sees a prime buying opportunity. Meanwhile, Amazon’s Project Kuiper prepares to challenge Starlink in Africa by 2026.
Why Is Bank of America Bullish on Amazon?
Bank of America’s analyst Justin Post argues that Amazon’s current valuation doesn’t reflect its long-term cloud and AI potential. “AWS’s revenue acceleration in 2026 could redefine Amazon’s market position,” Post notes. The stock’s modest 3% YTD gain (vs. S&P 500’s 17.7%) suggests room for upside, especially with Q4 earnings projected at $1.97 EPS—up from $1.86 a year prior. Amazon has beaten Wall Street’s profit estimates for four consecutive quarters, including a 23.4% EPS surprise in Q3 2025.
How Does AWS’s AI Strategy Impact Amazon’s Valuation?
Amazon Web Services (AWS) remains the dark horse in this story. While cloud growth concerns have weighed on shares, BofA believes AWS’s AI toolkit deployments—like Bedrock and CodeWhisperer—will drive re-rating. “The market isn’t pricing in AWS’s ability to monetize generative AI,” says Post. AWS’s potential integration with Project Kuiper’s satellite network (more on that later) could further differentiate it from Microsoft Azure and Google Cloud.
What’s Driving Amazon’s Retail Profit Surge?
Beyond cloud, Amazon’s e-commerce engine is firing on all cylinders. Cost-cutting measures and third-party seller fee optimizations have lifted operating margins to 6.3% in 2025 from 3.8% in 2023. The BTCC team observes: “Amazon’s retail segment now generates more profit per dollar than Walmart’s U.S. operations, thanks to automation and logistics upgrades.” Analysts forecast 2025 annual EPS at $7.17, up 30% YoY.
Why Does Amazon’s Nigerian Satellite License Matter?
In a geopolitical chess move, Nigeria just granted Amazon a 7-year license for Project Kuiper—its answer to SpaceX’s Starlink. Launching in 2026, this LEO (low-Earth orbit) network could connect remote AWS clients across Africa while sidestepping terrestrial infrastructure hurdles. “It’s a $1.2 trillion digital economy play,” notes a Lagos-based tech analyst. The NCC also approved licenses for Israel’s NSLComm and Germany’s Satelio, but Amazon’s scale dwarfs both.
How Does Amazon’s Valuation Compare to Tech Peers?
At $2.6 trillion market cap, Amazon trades at 24x forward earnings—below Microsoft (32x) and Nvidia (45x). BofA’s $215 price target implies 18% upside, banking on:
- Cloud margin expansion (AWS operating margin: 38% in Q3 2025)
- Retail EPS growth outpacing physical rivals
- Kuiper’s optionality in emerging markets
TradingView data shows AMZN’s RSI at 58, suggesting it’s not yet overbought despite the 11.4% 52-week gain.
What Are the Risks to BofA’s Thesis?
Regulatory scrutiny tops the list. The FTC’s ongoing antitrust case against Amazon could force asset sales. AWS also faces pricing pressure as Microsoft bundles AI services with Azure. “A recession in 2026 WOULD hit retail margins first,” cautions a BTCC markets strategist. That said, Amazon’s advertising arm (up 22% YoY) provides diversification.
Which Other Stocks Did Bank of America Recommend?
BofA’s broader upgrade list included:
| Company | Catalyst | Price Target |
|---|---|---|
| Brookdale Senior Living | Reduced government payer exposure | $13 (from $6.75) |
| Carvana | Physical dealership expansion | $515 (from $455) |
But Amazon remains the marquee pick, with Post calling it “a rare mix of value and growth in mega-cap tech.”
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Is now a good time to buy Amazon stock?
Bank of America believes so, citing Amazon’s undervalued AI/cloud potential and consistent earnings beats. However, investors should assess their risk tolerance given regulatory uncertainties.
How does Project Kuiper benefit AWS?
By providing direct satellite-to-cloud connectivity in regions with poor internet infrastructure, Kuiper could lock in emerging market clients for AWS—especially in Africa and Southeast Asia.
What’s Amazon’s EPS forecast for 2026?
Analysts project $7.85 EPS in 2026, a 9.5% increase from 2025 estimates. This assumes steady retail growth and AWS maintaining its cloud market share.
