BofA Securities has reduced its price target for Amazon.com, Inc. (NASDAQ:AMZN) to $286.00 from $303.00, but the firm left its Buy rating in place as investors await the company’s February 5 earnings report. At a reported share price of $238.42, Amazon still sits below the adjusted target, implying room for upside relative to BofA’s revised valuation metrics.
The research team at BofA expects Amazon to post fourth-quarter revenue of $213 billion and operating income of $26.0 billion. Those forecasts sit above the Street consensus figures of $211 billion in revenue and $24.6 billion in operating profit. BofA notes that market expectations appear clustered around $212.5 billion for sales and $26.0 billion for operating income. For additional context, Amazon's trailing 12-month revenue stands at $691.33 billion, representing 11.48% growth, per the InvestingPro data cited by analysts.
Central to BofA’s rationale is an upbeat view on Amazon Web Services (AWS). The firm projects AWS revenue will grow 22% year-over-year in the quarter, edging past the Street’s 21% estimate and accelerating from 20% growth reported in the third quarter. BofA attributes the improvement to increased capacity that is enabling incremental sales; the note references Amazon's chief executive indicating that demand remains ahead of capacity, which the firm interprets as supportive for pricing.
InvestingPro levels referenced in the BofA write-up underline Amazon’s strong financial positioning. The platform scores the company’s overall Financial Health as "GREAT," with particularly robust profit metrics. BofA’s forecast for AWS outperformance ties directly to those profitability strengths, while the valuation picture also includes a present market capitalization of $2.55 trillion and a price-to-earnings ratio of 33.82. InvestingPro data further suggests the stock trades slightly below its Fair Value estimate and shows a PEG ratio of 0.65, signaling a comparatively low P/E versus near-term expected earnings growth.
On the retail front, BofA anticipates North American results to come in marginally above consensus. The Street is modeling a deceleration in North American retail growth to roughly 10% year-over-year, a one percentage-point slowdown from prior periods. BofA’s analysis of aggregated debit and credit card information implies stable online spending patterns, supporting the firm’s slightly more optimistic view. The research note points to advertising momentum, lower fuel-related expenses, and improvements in inbound operations as drivers that could lift North American retail margins by about 50 basis points year-over-year.
BofA also expects first-quarter margins to benefit from workforce reductions implemented in the fourth quarter, which the firm believes will begin to materialize in operating leverage. These margin tailwinds, combined with advertising trends and cost reductions, form the basis for BofA’s projection of upside relative to current Street margin estimates.
Outside of earnings expectations, the company secured a notable contract win: Amazon Web Services Inc. was awarded a $581 million firm-fixed-price contract by the U.S. Department of Defense to support the Air Force’s Cloud One Program. The agreement covers delivery of Amazon cloud services to the Air Force and its customers, with work slated for completion by December 2028. That contract is cited in analyst commentary as a substantive commercial win within the defense-focused cloud market.
Analyst sentiment remains mixed across the sell-side. Evercore ISI reiterated an Outperform rating and set a $335 price target, referencing improvements in Amazon’s unit-cost curve. Bernstein SocGen Group maintained an Outperform stance as well, keeping a $300 target and highlighting growth potential into 2026. In contrast, Raymond James trimmed its price target to $260, pointing to AI-related "Agentic Commerce risks" as a rationale for the more cautious valuation.
Investors looking for deeper company-level analysis can access Amazon’s Pro Research Report among more than 1,400 U.S. equities on InvestingPro, which the note references for comprehensive coverage of the company’s financial health and forward prospects ahead of the February 5 report.
What to watch into the earnings release:
- BofA’s revenue and operating income estimates versus consensus - $213.0 billion and $26.0 billion, respectively.
- AWS growth rate and capacity commentary - BofA projects 22% year-over-year growth.
- North American retail margin trajectory and the impact of advertising, fuel costs, and inbound process improvements.