Amazon Stock Will Rise Because of Bedrock’s AI Focus, According to UBS

Amazon Stock

Amazon Stock (NASDAQ:AMZN)

UBS analyst Lloyd Walmsley predicts further gains for Amazon’s (NASDAQ:AMZN) stock this year because of the company’s plans to expand the use of its Bedrock foundation model API.

Late Thursday afternoon, AMZN was up 2.2% to $123.91. Wells Fargo’s Overweight rating to begin coverage on the Amazon stock helped boost confidence.

In April, Amazon Web Services (AWS), the cloud computing division of Amazon, introduced a new set of tools intended for artificial intelligence (AI) dubbed Bedrock.

Bedrock enables users to combine their own data with foundation models (FMs) — AI-based technologies developed by “leading AI startups” — to generate the model they want at the moment without having to purchase servers.

In a research note published on Wednesday, Walmsley predicted that “we see room for AMZN shares to move higher as AWS reaccelerates in 4Q as Bedrock expands,” adding that channel checks had made him “more sanguine” about AWS’s prospects in generative AI. Amazon stock was kept at a Buy rating, but the price target was raised from $130 to $150, a 23.7% rise from AMZN’s last closing price of $121.23.

In contrast to Microsoft and Alphabet, as well as other key technology brands like NVIDIA, the reaction to Amazon’s disclosures on its AI capabilities has been more subdued. In addition, clients wishing to reduce spending owing to economic uncertainties prompted the business to predict a slowdown in cloud computing in its most recent quarterly report, which it claimed began in April.

Despite AWS’s late start on large language models (LLMs), UBS’s Walmsley believes that FMs might become commodities and help AWS.

Channel partners anticipate rapid progress from AWS in its LLMs and AI-focused processors, which should see robust demand despite supply constraints. Later this year, when Bedrock is more widely implemented, we anticipate more demand,” Walmsley explained.

Even if the analyst believes Amazon’s “valuation has run,” he expects the company to continue growing.

Wall Street experts recommend a Strong Buy of AMZN stock.

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