Amazon price target raised at Mizuho on GenAI potential

Investing.com -- Mizuho increased its price target for Amazon (NASDAQ:AMZN ) from $240 to $260 in a note Tuesday, citing the growing opportunity in generative AI (GenAI) applications as a key driver.

The firm explained that at the AWS re:Invent 2024, Amazon Web Services (AWS) showcased innovations designed to address hurdles in deploying GenAI solutions, setting the stage for significant growth in FY25.

Mizuho (NYSE:MFG ) states that AWS's efforts focus on three major areas: reducing costs, simplifying app development, and enabling advanced AI-agent functionalities.

Its new Trainium2 chip is said to reduce capacity costs by 40%, providing an affordable option for scaling GenAI. Meanwhile, the firm notes that the Bedrock platform offers tools to automate coding, data integration, and model selection, expediting the app development process.

Furthermore, AWS is said to be enabling advanced AI-agent workflows in areas like loan underwriting by leveraging foundational models with reasoning capabilities and enhanced context processing.

"With use-cases moving into production, we expect inferencing volume should accelerate through application development and usage in FY25, affirming our thesis of Gen-AI's consumption multiplier effect," wrote Mizuho.

The consumption multiplier effect has led Mizuho to raise its FY25 AWS revenue growth forecast to 21% from 19%.

The firm remains positive on the broader cloud computing space, maintaining Outperform ratings on Amazon, Microsoft (NASDAQ:MSFT ), and Alphabet (NASDAQ:GOOGL ).

Mizuho analysts note that AWS's advancements position it as a leader in GenAI, poised to capitalize on rising demand as enterprises increasingly adopt these technologies.

Source: Investing.com