Amazon’s Rivals ‘Haven’t Come Close’ to Matching Its Scale. The Retailer Gets a Buy Rating.

“No other e-commerce platform comes close to matching the scale that
Amazon
has amassed (outside China) since its inception,” Kelley wrote in a research note. He added he believes Amazon has the broadest selection of items available at low prices; the broadest fulfillment network, with usually the shortest delivery times; and the most resources available for third-party sellers.

It isn’t just the current size of Amazon that Kelley likes. He sees room for growth, with potential for gains at Amazon Web Services and from the expansion of the company’s advertising business.

While spending on information technology has slowed down as economic pressures encourage businesses to cut costs, Kelley believes that cloud spending, and outlays at AWS in particular, has likely hit bottom or is close to doing so.

Truist analyst Youssef Squali wrote in a research note on Tuesday that he expects Amazon to report 13% year-over-year third-quarter revenue growth at AWS, saying “such a performance would imply that AWS growth troughed in 2Q23, which would be a positive catalyst for the stock.” Squali rates the stock as a Buy with a target of $174 for the price.

Amazon is scheduled to report its results for the third quarter on Oct. 26.

Kelley added that while Amazon was “a pioneer in what is now known as retail media (retailers becoming publishers and selling advertising on their apps and sites),” the company is expanding beyond that.

Amazon said in September that advertising would be introduced to Prime Video in the U.S., U.K., Germany, and Canada in early 2024. The company is also an advertising partner with social-media platform
Pinterest
(PINS), “offering Amazon advertisers as an incremental demand source,” Kelley said.

The stock was down 0.9% in premarket trading Tuesday to $131.41. It has surged 58% in 2023.

Write to Angela Palumbo at [email protected]