Amazon Surges 13% After Earnings as JPMorgan Predicts New Record Highs With $365 Target

TradingKey - Amazon's stellar earnings report fueled a surge in its stock price, and JPMorgan believes that factors such as gross margin expansion and AI monetization will drive its stock price further upward.

On July 31, Eastern Time, Amazon ( AMZN )'s latest earnings report was exceptionally strong, driving its stock price up 13% in pre-market trading to break past $260, recovering losses from the past two months and nearing its all-time high of $278 set on May 5 this year, which is now only 7% away. The surge in Amazon's stock price was primarily because its earnings results dispelled previous market concerns, specifically regarding AWS cloud revenue and profit, as well as the commercialization of its AI business.

Amazon stock price chart, Source: TradingView

Prior to the earnings release, investors had been concerned that Amazon's market share in the cloud sector was being eroded by Microsoft ( MSFT) Azure and Google Cloud. However, AWS delivered an exceptionally strong scorecard: AWS revenue this quarter grew 18.8% year-over-year to $30.5 billion, beating Wall Street's expectation of $29.7 billion. Furthermore, AWS quarterly operating profit reached $11.2 billion, maintaining an exceptionally high operating margin of 36.7% and contributing over 60% of the entire company's profit source.

In addition, against the backdrop of Nvidia's ( NVDA) expensive GPUs and tight supply, Amazon launched the highly cost-effective Trainium 2 and Inferentia chips, which were quickly adopted by major clients like Anthropic and Ricoh, significantly boosting AWS's gross margin. Amazon's deep partnership with Anthropic also enables enterprises to directly run top-tier AI models on AWS, driving a significant increase in the average customer contribution within the AWS ecosystem.

JPMorgan believes Amazon's stock price will not only continue to rise and set new records, but has also raised its target price from $330 to $365, representing about 40% upside from current levels. In the view of JPMorgan's analyst team, although capital expenditures (CapEx) remain high for data center construction, strong operating cash flow is sufficient to support R&D and capacity expansion, making the overall financial health exceptionally robust. More importantly, demand for Amazon's proprietary AI chips is exploding, and its deep partnership with AI giants like Anthropic is expected to drive rapid expansion in the cloud contract backlog.