Amazon Faces AWS Capacity Challenges But AI Revenue Surges
Despite operational challenges in AWS, Amazon's AI revenue continues to thrive.
Key Points
- • Oppenheimer lowers Amazon's price target to $245 due to AWS capacity issues.
- • CEO Andy Jassy emphasizes AI as a transformative technology.
- • AWS AI revenue growth remains strong, with triple-digit year-over-year increases.
- • No consumer weakness is observed despite ongoing tariffs.
Oppenheimer analyst Jason Helfstein has revised Amazon's price target down to $245 from $250, reflecting ongoing operational concerns particularly within its Amazon Web Services (AWS) division. Despite these challenges, including persistent capacity issues through the remainder of 2025, Amazon's artificial intelligence initiatives remain a bright spot. CEO Andy Jassy has highlighted AI as the most significant technology transformation in a generation, underscoring its critical role in the company's future. Notably, AWS AI revenue continues to experience triple-digit growth year-over-year, showcasing strong demand and potential within this segment. In contrast to these operational issues, consumer activity remains robust, with no signs of weakness observed, even amidst tariff impacts. While Oppenheimer acknowledges Amazon's promising AI trajectory, the firm notes that some competing AI stocks might present a more favorable risk-reward profile for investors.