Bank of America Urges Investors to Buy Amazon Stock Before Earnings Report – Here’s Why
- Why is Bank of America Bullish on Amazon Now?
- How Does AWS's AI Potential Factor Into This Recommendation?
- What Are the Key Financial Projections?
- How Does Amazon's Retail Business Factor In?
- What's the Significance of Amazon's Nigeria Satellite License?
- How Does Amazon Compare to Other BofA Top Picks?
- What Technical Indicators Suggest About Amazon's Stock?
- What Risks Should Investors Consider?
- Frequently Asked Questions
Bank of America has added Amazon to its coveted "Top Picks" list ahead of the tech giant's Q4 2025 earnings release, citing strong growth potential in both retail and cloud computing sectors. With AWS positioned for an AI-driven acceleration and retail operations showing improved efficiency, analysts project nearly 30% EPS growth this year. The recommendation comes as Amazon secures a major satellite broadband license in Nigeria, expanding its global infrastructure play.
Why is Bank of America Bullish on Amazon Now?
Bank of America's analyst Justin Post highlights Amazon's current valuation as undervalued relative to its growth potential, particularly in AWS. "The market isn't fully pricing in AWS's AI capabilities," Post noted in the research memo. Amazon shares have gained just 3% YTD compared to the S&P 500's 17.7% rise, creating what BofA sees as a buying opportunity before earnings.
How Does AWS's AI Potential Factor Into This Recommendation?
The cloud computing division remains Amazon's crown jewel, despite recent investor concerns. BofA believes AWS is poised for accelerated growth in 2026 as AI adoption increases across industries. "Amazon's AI infrastructure investments position AWS to capture significant market share as enterprise AI deployments scale," the report stated. Current AWS growth rates (15.8% last quarter) could accelerate to 20%+ with AI-driven demand.
What Are the Key Financial Projections?
Analysts expect Amazon to report Q4 EPS of $1.97, up from $1.86 YoY. Full-year 2025 EPS projections stand at $7.17 (30% growth), with 2026 estimates at $7.85. Amazon has beaten Wall Street earnings estimates for four consecutive quarters, including a 23.4% EPS surprise last quarter. TradingView data shows institutional ownership increasing by 8% since December.
How Does Amazon's Retail Business Factor In?
Beyond cloud computing, BofA praised Amazon's retail efficiency improvements. "Their fulfillment center optimization and regionalization strategy continues delivering cost savings," Post observed. Retail margins expanded 180 basis points last quarter, with further improvement expected. The analyst projects retail operating income growth will outpace peers in 2026.
What's the Significance of Amazon's Nigeria Satellite License?
In a strategic move, Nigeria just granted Amazon a 7-year satellite broadband license for its Project Kuiper network, set to launch in 2026. This positions Amazon to compete directly with SpaceX's Starlink in Africa's rapidly digitizing markets. The infrastructure play could eventually integrate with AWS, creating new cloud access points across the continent.
How Does Amazon Compare to Other BofA Top Picks?
The bank's conviction list also includes Carvana (price target raised to $515) and Brookdale Senior Living (target doubled to $13). However, Amazon stands out for its combination of cloud growth potential, retail scale, and now, global infrastructure expansion. "Few companies offer this breadth of growth drivers," the report concluded.
What Technical Indicators Suggest About Amazon's Stock?
Chart analysis shows AMZN testing resistance at $185, with a breakout above this level potentially signaling further upside. The stock trades at 28x forward earnings - below its 5-year average of 34x. Relative to peers, Amazon's EV/EBITDA of 18x compares favorably to Microsoft's 24x in cloud computing.
What Risks Should Investors Consider?
While bullish, BofA notes regulatory scrutiny of cloud providers and potential economic softness as risks. AWS growth could disappoint if enterprise tech spending slows. This article does not constitute investment advice. Always conduct your own research before trading.
Frequently Asked Questions
Why is Bank of America recommending Amazon stock now?
BofA sees Amazon as undervalued relative to its growth potential in both cloud computing (AWS) and retail operations, particularly with AI adoption accelerating.
What price targets is Bank of America setting for Amazon?
While the report didn't specify a new price target, it maintained a Buy rating with implied upside from current levels based on 2026 EPS projections of $7.85.
How has Amazon performed compared to the market this year?
AMZN shares gained 3% YTD versus 17.7% for the S&P 500, creating what analysts see as catch-up potential.
What makes AWS particularly attractive now?
Bank of America believes AWS's AI infrastructure investments position it for accelerated growth in 2026 as more enterprises adopt AI solutions.
How significant is Amazon's Nigeria satellite license?
The 7-year broadband license marks Amazon's entry into Africa's telecom market and could eventually support AWS expansion in the region.
