Amazon stock price forecast: Wells Fargo sees a 30% upside

Amazon.com Inc (NASDAQ: AMZN) is already up nearly 45% for the year but a Wells Fargo analyst says it’ll unlock a lot more upside in the coming months.

Amazon stock should be worth $159

On Thursday, Ken Gawrelski assumed coverage of the eCommerce behemoth with an “overweight” rating and announced a $159 price target – up another 30% from here.

His bullish view on Amazon stock is primarily based on the company’s transition to regional fulfilment centres.

It’s already having a meaningful impact to fulfilment and shipping efficiency. Annualised fuel and labour savings may have already reached $6.5 billion, 30% of 2023 consensus [operating income].

In April, the multinational warned of continued deceleration in cloud revenue as Invezz reported here. Its Q1 financial results, though, were better than expected.

Amazon will continue to improve margins

Still, Gawrelski is convinced that Amazon Web Services – the cloud business will materially reaccelerate later this year.

The Wells Fargo analyst likes Amazon stock also because he expects a smaller footprint in terms of fulfilment centres to help the company return its margins to 2018 levels in a couple of years. His research note reads:

We see North America retail margins improving more quickly than consensus with 2018 margins returning by 2025, implying significant OI upside. We expect AWS bottoming in 3Q.

Remember that the Seattle-headquartered firm could also be a beneficiary of the A.I. mania. It recently launched Amazon Bedrock to expand its footprint in artificial intelligence.