Amazon (NASDAQ:AMZN) stock recently reached record highs, surpassing $2.5 trillion in market cap. As the company prepares to report its Q4 earnings, the stock has experienced some volatility due to a broad tech selloff, but it continues to outperform the S&P 500 Index ($SPX). With analysts remaining bullish on Amazon stock, the big question is: can it continue its upward trajectory? In this article, we’ll dive into Amazon’s Q4 earnings estimates and explore whether its stock is still a buy after hitting such high levels.

Amazon Q4 Earnings Estimates: What to Expect

Analysts are optimistic about Amazon’s Q4 performance, with revenue expected to rise 10.2% year-over-year, reaching $187.2 billion. Amazon itself had projected revenues between $181.5 billion and $188.5 billion for Q4, although its midpoint guidance was slightly below analysts’ estimates, continuing a trend seen in recent quarters.

Earnings per share (EPS) for Q4 are expected to increase by 50%, with operating income forecasted to range from $16 billion to $20 billion, compared to $17.4 billion in Q3. Although Amazon’s revenue growth has been steady, its profitability has seen a significant boost, driven by aggressive cost-cutting and efficiency improvements.

Amazon Stock: A Favorite Among Wall Street Analysts

Heading into 2025, Amazon is part of the prestigious “Magnificent 7” group of stocks that are seen as the top picks by Wall Street. Among the 49 analysts covering Amazon stock, 45 rate it as a “Strong Buy,” with three suggesting a “Moderate Buy” and just one recommending a “Hold.” This widespread optimism reflects confidence in Amazon’s ability to continue driving growth, especially in its cloud business and new technological innovations.

The average target price for Amazon stock is $256.86, which represents a 4.4% upside from the February 4 closing price. The highest target price is $306, indicating a potential 26.4% upside. These bullish projections are supported by Amazon’s dominant position in the cloud market, its expanding AI efforts, and its continued focus on operational efficiencies.

Why Amazon Stock Remains a Strong Buy for the Long Term

While short-term trading around quarterly earnings can be risky, Amazon stock is a solid buy for long-term investors. Here are some reasons why:

Cloud Growth Story is Back

Amazon Web Services (AWS), the company’s high-margin cloud business, is experiencing a resurgence and looks set to capitalize on the AI boom. AWS remains the cash cow for Amazon, and continued growth in this sector is critical for Amazon’s overall profitability. As demand for cloud computing rises, AWS is expected to remain a key driver of the company’s revenue.

Efficiencies Driving Higher Margins

Amazon has been aggressive in cutting costs and improving efficiencies across its business, which has led to stronger margins. Automation is playing a major role in driving these efficiencies, particularly in the company’s e-commerce operations. There is still room for Amazon to improve its e-commerce margins, both in the U.S. and internationally, which will further enhance its profitability.

Amazon’s AI Opportunity

Amazon is quickly becoming one of the most underappreciated players in the AI space. The company is incorporating AI across multiple facets of its business, from improving logistics to enhancing customer engagement. AI is also helping Amazon reduce costs, with its AI business running at a “multibillion-dollar” run rate and growing at triple-digit rates. Notably, Amazon’s Trainium2 AI chip is already being used by companies like Apple (NASDAQ:AAPL) to train their AI models.

Long-Term Growth Prospects

Beyond cloud and AI, Amazon is also well-positioned for long-term growth in areas like business-to-business (B2B) sales through its Amazon Business platform. This division has already reached a multibillion-dollar revenue run rate and is poised for further expansion.

Conclusion: Is Amazon Stock Still a Buy?

Despite its record highs and current valuation, Amazon stock remains an attractive investment for long-term growth. With its leadership in the cloud, its expanding role in AI, and its continuous push for operational efficiencies, Amazon is poised for future success. Trading at 41x its expected earnings for the next 12 months, Amazon stock is reasonably valued considering its growth prospects.

For investors seeking a diversified, growth-driven stock with significant potential in various high-growth industries, Amazon remains a strong buy.

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