Amazon Stock Is a Top Pick for 2023, Analysts Say
Wall Street believes that strong fundamentals, increased profitability and a deeply discounted valuation give Amazon stock 50% upside next year.


Amazon.com (AMZN) stock has had a terrible 2022, but Wall Street says the e-commerce and cloud-computing giant is positioned for outsized returns next year.
J.P. Morgan analyst Doug Anmuth reminded clients of that fact on Monday, calling Amazon stock one of the research firm's best ideas for 2023. The analyst reiterated his Overweight (the equivalent of Buy) recommendation on AMZN stock, as well as his price target of $145.
And Anmuth, whose price target gives Amazon stock implied upside of more than 50% in the next 12 months or so, is hardly alone in his ardor for the name.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Of the 52 analysts issuing opinions on AMZN stock tracked by S&P Global Market Intelligence, 34 call it a Strong Buy, 15 say Buy, two have it at Hold and one calls it a Sell. That works out to a consensus recommendation of Strong Buy, which is a fairly rare honor on the Street. Only 24 stocks in the S&P 500 receive a consensus recommendation of Strong Buy, per S&P Global Market Intelligence.
Meanwhile, the Street's average target price of $142.70 likewise gives Amazon stock implied upside of more than 50% in 2023.
Amazon is benefiting from the "continued secular shift toward e-commerce and cloud growth," Anmuth notes, and is finally poised to leverage years of capital investment in its fulfillment capacity. Those capital expenditures should pay off by allowing the company to expand its operating profit margin to 4.2% in 2023 from 2.4% this year, the analyst estimates.
Profitability will further be enhanced by the fast-growing Amazon Web Services (AWS) cloud-computing business and increased revenue from advertising, Anmuth says.
In addition to Amazon's fundamental drivers, AMZN stock bulls say shares are cheap after losing more than 40% of their value so far in 2022.
For one thing, Amazon's cloud-computing business alone is worth more than the value the market is assigning to the entire company.
Just look at Amazon's enterprise value, or its theoretical takeout price that accounts for both cash and debt. It stands at $953.2 million. Meanwhile, AWS has an estimated enterprise value by itself of $1.2 trillion to $2 trillion, analysts say.
In other words, if you buy Amazon stock at current levels, you're getting the retail business essentially for free. True, AWS and Amazon's advertising services business are the company's shining stars, generating outsized growth rates. But retail still accounts for more than half of the company's total sales.
More basic valuation metrics tell much the same story with Amazon stock. Shares change hands at 54 times analysts' 2023 earnings per share (EPS) estimate, according to data from S&P Global Market Intelligence. And yet AMZN stock has traded at an average forward P/E of 75 over the past five years.
That's a compelling relative valuation. But even more compelling is that Amazon stock trades at just 30 times analysts' 2024 EPS estimate.
Paying 30-times expected earnings might not sound like a bargain on the face of it. But then few companies are forecast to generate average annual EPS growth of more than 30% over the next three to five years. Amazon is. Combine those two estimates, and Amazon stock offers far better value than the broader market.
Lastly, let's not forget that Amazon is in the midst of a massive cost-cutting campaign that will further boost operating earnings going forward.
Amazon management forecast a disappointing holiday shopping season and continues to worry about how inflation and a possible economic slowdown will impact consumer spending.
No, the company's problems won't fade away overnight. But the selloff in Amazon stock does give patient investors a chance to buy a top-rated name at a deeply discounted price, bulls contend.
"Amazon likely faces a few challenging quarters, but continues to have a strong portfolio of assets," writes Argus Research analyst Jim Kelleher, who rates shares at Buy. "We believe that the lagging performance provides an opportunity to establish or dollar-cost-average into positions in AMZN stock, which remains the undisputed category leader."
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Dan Burrows is Kiplinger's senior investing writer, having joined the publication full time in 2016.
A long-time financial journalist, Dan is a veteran of MarketWatch, CBS MoneyWatch, SmartMoney, InvestorPlace, DailyFinance and other tier 1 national publications. He has written for The Wall Street Journal, Bloomberg and Consumer Reports and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among many other outlets. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange.
Once upon a time – before his days as a financial reporter and assistant financial editor at legendary fashion trade paper Women's Wear Daily – Dan worked for Spy magazine, scribbled away at Time Inc. and contributed to Maxim magazine back when lad mags were a thing. He's also written for Esquire magazine's Dubious Achievements Awards.
In his current role at Kiplinger, Dan writes about markets and macroeconomics.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade individual stocks or securities. He is eternally long the U.S equity market, primarily through tax-advantaged accounts.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?
Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
I’m 53, make $500,000 a year and live paycheck to paycheck. I want to retire at 65 but we only have $200,000 saved. Am I nuts?
We asked an expert wealth planner for advice.
-
Stocks Struggle to Start Nvidia Week: Stock Market Today
Another important week for the stock market starts on a risk-off note.
-
Dow Rips 846 Points to New All-Time High: Stock Market Today
Fed Chair Jerome Powell seems ready to cut interest rates in the fall but will still rely on incoming economic data about inflation and employment.
-
Tech Sells Off While Trump Stirs the Fed: Stock Market Today
We've reached another important part of earnings season, though markets remain captivated by the president, the Fed, and interest rate policy.
-
Dow Retreats From a Record High: Stock Market Today
Quietly rising since April, Home Depot stock was conspicuously constructive Tuesday as high-profile tech names dragged equity indexes down.
-
What Tariffs Mean for Your Sector Exposure
New, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market Today
The last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
-
Stocks Can't Hold Meta, Microsoft Gains: Stock Market Today
The main indexes all opened higher Thursday on impressive Big Tech earnings, but momentum faded into the close.
-
Stocks Are Up and Down on Fed Day: Stock Market Today
In another sign of changing times, JPMorgan has partnered with Coinbase to enable cryptocurrency purchases with credit cards.