Evercore ISI on Amazon.com (AMZN): 'A Constructive Setup Into The Print'

Evercore ISI analyst Mark Mahaney reiterated an Outperform rating and $335.00 price target on Amazon.com (NASDAQ: AMZN).

The analyst comments "Our View: We think AMZN likely prints an In-Line & Bracket Q4. We view the Street’s Q4 Revenue estimate ($211B, +12% Y/Y and +17% Q/Q vs. recent historical Q4 Q/Q of +19% to +18%) and Operating Income estimate ($24.6B, 11.7% Margin, implying 40bps Y/Y expansion) as reasonable based on our intra-quarter datapoints and model sensitivity analysis. We call out reasonably supportive macro data on retail spending but softer Second Measure data specific to Amazon’s observed sales. Stock Setup: We like the AMZN setup into the print with modest/soft read-thrus from Azure’s results and from 3P retail credit card data dampening down expectations somewhat. Fundamentally, we see in AMZN ’26 a potential acceleration/expansion story (revenue growth acceleration & operating margin expansion). And narratively, we see in AMZN ’26 the potential for the script to flip from AI Laggard to AI Winner – in a manner not too dissimilar to GOOGL ’25 (tho not as dramatic.) AMZN is our #1 Large Cap Net Long. For Q1:26, we view the Street’s Revenue estimate ($175B, +13% Y/Y and -17% Q/Q vs. recent historical Q1 Q/Q of -17% to -16%) and Operating Income estimate ($21.9B, 12.6% Margin, implying 80bps Y/Y expansion) as bracketable with more potential for upside on OI than on Revenue. For Q4, we think investors will be looking for: 1) evidence that AWS growth can continue to accelerate with clear backlog / Trainium chip deployment / Gen AI workload adds despite ongoing power constraints – and a path for AWS margins to roughly hold even as depreciation ramps; 2) proof that North America / International retail unit economics continue to leverage as same/next-day coverage scales (cost-to-serve, touches per order, items per box) with limited elasticity risk even as tariff/inflation passes through; 3) durability of ad growth, focused on Prime Video / CTV and DSP partnerships; and 4) updated cadence on capex/power procurement and capacity coming online vs. demand. Key Items: 1) North America & International Retail Results: We estimate NA Retail Revenue of $127.7B, up +10.5% Y/Y (a 80bps decel on a 80bps tougher comp) and Segment Operating Income of $11.1B (8.7% Margin, vs. Street at 8.5%). We estimate International Retail Revenue of $49.1B (up +13% Y/Y, a 1-pt decel on a 3.8-pt easier comp), and Segment Operating Income of $1.7B (3.5% Margin vs. Street at 3.9%). 2) AWS Revenue Growth & Margin: We expect Q4 AWS Revenue of $34.6B (up +20% Y/Y, stable on a flattish comp). We are looking for AWS Operating Profit of $12.3B (35.6% Margin vs. Street at 33.9%). 3) Operating Margin: We are modelling 11.9% in total Op Margin for Q4 vs. 12.0% in Q3:25 normalized margin and 11.3% in Q4:24, slightly higher than the Street at 11.7%. 4) FCF & CapEx Trends: We are modelling $31.6B in FCF for FY25, implying a 4.4% FCF Margin. In terms of CapEx, we are modelling $125.17B for FY25 (+61% Y/Y), slightly higher than the Street."

For an analyst ratings summary and ratings history on Amazon.com click here. For more ratings news on Amazon.com click here.

Shares of Amazon.com closed at $239.30 yesterday.

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