What analysts are saying about Amazon after its post-earnings decline

Amazon (NASDAQ:AMZN) was down 8.0% in premarket trading on Friday after the e-commerce giant set operating income guidance slightly below expectations and missed the whisper number on Wall Street for Q2 AWS growth. Concerns on Amazon (NASDAQ:AMZN) keeping with AI rivals such as Microsoft (MSFT) have also crept into the discussion.

However, analysts are out in force making the case that investors should buy the dip.

Morgan Stanley kept Amazon (AMZN) slotted as a top pick. Analyst Brian Nowak noted that retail growth and profit improvements are shining and driving earnings. The firm expects Amazon’s (AMZN) ability to match and ship more items to more people faster and in a more profitable manner will continue to improve. “We also expect robotics and automation to be a further driver of more durable FCF/transaction… with OBBBA a potential robotics accelerant,” he advised.

Wedbush Securities analyst Dan Ives said his team expects that there is some conservatism embedded in AMZN management’s outlook since the company has outperformed the high end of its revenue and operating income guide for several consecutive quarters. “We continue to see multiple levers of sustainable margin improvement, including fulfillment optimization and the structural mix shift towards higher-margin AWS and advertising revenues,” he wrote. Wedbush has an Outperform rating on Amazon (AMZN) and price target of $250.

Jefferies analyst Brent Thrill also highlighted that Amazon (AMZN) generally takes a pragmatic approach to its profit outlook. He observed that Amazon (AMZN) has delivered an average operating income beat of 64% vs. the midpoint of the guidance range over the past 13 quarters. Jefferies kept its Buy rating on Amazon (AMZN) and price target of $265 in place.

Evercore ISI analyst Mark Mahaney said the AWS backlog growth acceleration to 25% was a distinct positive for Amazon (AMZN), but the rest of the AWS results and commentary just did not address the market’s concern that Amazon is “missing” the AI Cloud opportunity. However, Mahaney thinks the setup for AWS growth is in place and said supply constraints are incrementally being addressed. Amazon (AMZN) was kept as one of Evercore’s top large-cap longs.

Seeking Alpha analyst Kenio Fontes (Buy rating)

“Amazon is one of the leading companies for exposure to long-term trends in a very efficient and diversified manner. As Q2 earnings showed, the company is not only already delivering significant progress in fundamentals, but also has many projects that will continue to yield results in the coming years and decades.”

Ahan Vashi, Investing Group Lead of The Quantamental Investor

“With Amazon’s business in fine fettle and its 5-year expected CAGR return exceeding TQI’s investment hurdle rate, I view the post-ER dip in Amazon stock as a buying opportunity for long-term investors.”