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."

Dan Burrows is Kiplinger's senior investing writer, having joined the august publication full time in 2016.
A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. He has written for The Wall Street Journal, Bloomberg, Consumer Reports, Senior Executive and Boston magazine, and his stories have appeared in the New York Daily News, the San Jose Mercury News and Investor's Business Daily, among other publications. As a senior writer at AOL's DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities.
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 equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more.
Dan holds a bachelor's degree from Oberlin College and a master's degree from Columbia University.
Disclosure: Dan does not trade stocks or other securities. Rather, he dollar-cost averages into cheap funds and index funds and holds them forever in tax-advantaged accounts.
-
Holiday Shopping? Here’s Why Some Stores May Let You Keep Your Returns
With the holiday shopping season in full swing, you're likely to find more stores shunning returns in favor of a 'keep-it' policy, study finds.
By Jamie Feldman Published
-
Stock Market Today: Stocks Swing Higher After Powell Speech
Fed Chair Powell poured cold water on potential rate cuts, but stocks jumped anyway.
By Karee Venema Published
-
Stock Market Today: Stocks Close Lower on Cyber Monday
The main indexes were choppy to start the week, though several e-commerce stocks jumped on encouraging online holiday shopping numbers.
By Karee Venema Published
-
Stock Market Today: Dow Spikes 489 Points After Encouraging Inflation Data
Tuesday's cooler-than-expected CPI report lit a fire under stocks.
By Karee Venema Published
-
Stock Market Today: S&P 500 Joins Nasdaq in Correction Territory
The Nasdaq managed to hold higher into the close thanks to a strong earnings reaction for mega-cap stock Amazon.
By Karee Venema Published
-
Stock Market Today: Stocks Fall Again After Sizzling GDP Report, Meta Earnings
The first look at third-quarter GDP came in higher than expected, with consumer spending helping to prop up the economy.
By Karee Venema Published
-
Stock Market Today: Nasdaq Enters Correction Territory After Alphabet Earnings
Solid results from Microsoft weren't enough to offset substantial post-earnings losses from fellow mega-cap stock Alphabet.
By Karee Venema Published
-
Stock Market Today: Earnings Boost Stocks, Bitcoin Price Hits New High
Bitcoin rallied to its highest level since May 2022 amid signs that a spot bitcoin ETF could hit the market sooner rather than later.
By Karee Venema Published
-
Stock Market Today: Stocks Sink With Big Tech Earnings on Deck
American Express and Regions Financial were two post-earnings losers Friday, while SolarEdge slumped on its Q3 warning.
By Karee Venema Published
-
Stock Market Today: Stocks Advance as Rate-Hike Fears Subside
The major benchmarks posted broad-based gains amid speculation the central bank will hold rates steady at the next Fed Meeting.
By Dan Burrows Last updated