Why Bank of America Remains Bullish on Amazon (AMZN) Stock

Bank of America kept a $225 price target and a Buy rating on Amazon (AMZN) stock today, citing the tech conglomerate’s valuation, the strength of its cloud-infrastructure unit, and its rising retail margins.

Amazon Versus Walmart (WMT) 

Amazon is changing hands for 23 times analysts’ average 2026 earnings per share estimate, while WMT’s equivalent forward P/E ratio is 32 times, Bank of America noted.

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A close-up of a customer using the company’s e-commerce platform whilst shopping online.

The disparity is explained by Amazon’s higher revenue from China and lesser reliance on groceries, but Amazon’s cloud-infrastructure unit should provide some support for AMZN’s valuation, according to the bank.

Why Bank of America Remains Upbeat on AMZN

The short-term outlook of Amazon is unknown to some extent, the bank stated. But Amazon’s e-commerce margins are rising, and it should get a boost from the continued proliferation of AI, Bank of America believes. Consequently, the conglomerate’s longer-term outlook is positive, according to Bank of America.

Short-Term Volatility

Investor sentiment towards the name has been volatile, improving when AMZN’s CEO said that consumers’ purchasing habits were not changing, and declining as worries about tariffs and the economy deteriorated, the bank noted.

While we acknowledge the potential of AMZN, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: The author owns shares of AMZN but has no intention of trading them in the next 48 hours. This article is originally published at Insider Monkey.