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Why Bank of America Is Bullish on Amazon’s Q2 2025 Outlook

Rhys NorthwoodMonday, Apr 21, 2025 3:12 pm ET

3min read

Bank of America’s recent research on Amazon (AMZN) paints a compelling picture of the e-commerce giant’s potential to surge toward $220 per share by the second quarter of 2025. This optimism is rooted in Amazon’s multi-faceted growth engines—cloud computing, Prime subscriptions, advertising, and operational efficiency—while acknowledging risks that could temper its trajectory. Let’s dissect the case for Amazon’s ascent and why investors should take note.

AWS: The Cloud Engine Driving Growth

At the heart of Bank of America’s bullish thesis is Amazon Web Services (AWS). The firm forecasts AWS revenue to grow by 25% in 2025, fueled by rising demand for cloud infrastructure from businesses and governments. AWS’s dominance in the cloud market—currently holding about 40% of the global cloud infrastructure spend—positions it to outpace competitors like Microsoft Azure and Google Cloud.

The cloud segment is critical because it delivers higher margins than Amazon’s core e-commerce business. Bank of America analysts argue that AWS’s ability to capture new enterprise clients and expand into emerging markets like Southeast Asia and Africa could amplify this growth. For context, AWS generated $80 billion in revenue in 2023; a 25% increase would push it toward $100 billion by 2025—a milestone that could solidify Amazon’s lead in the tech sector.

Prime Subscriptions and Advertising: The High-Growth Twins

Beyond AWS, Bank of America highlights two other pillars of Amazon’s growth: its Prime membership program and advertising revenue. With over 250 million Prime subscribers globally, Amazon continues to monetize its ecosystem through subscription fees and targeted services like streaming and exclusive deals. The analysts suggest that Prime’s appeal—especially in underpenetrated markets like India and Brazil—could add millions more subscribers in 2025.

Meanwhile, advertising revenue is set to boom as Amazon improves its ad-targeting algorithms and expands ad inventory across its platforms. The firm projects this segment to grow at a 20% annual clip, surpassing $50 billion in 2025. This would put Amazon on par with Google and Facebook in digital ad dominance, a trend that could further diversify its revenue streams.

E-Commerce Resilience and Global Ambition

Despite macroeconomic headwinds, Amazon’s U.S. e-commerce business remains a cash cow. The company holds a 40% share of the U.S. e-commerce market, and its logistics and pricing power give it an edge over rivals like Walmart and Target. Bank of America’s research notes that Amazon’s cost-cutting measures—such as reducing third-party seller fees and optimizing warehouse networks—could improve profitability without sacrificing growth.

Abroad, Amazon’s push into markets like Europe, the Middle East, and Latin America is gaining traction. For example, its acquisition of Souq Group in the Middle East and investments in Amazon Fresh grocery stores in the U.K. are laying the groundwork for long-term expansion.

The Bullish Case: $220 by Q2 2025

Combining these factors, Bank of America analysts set a $220 price target for AMZN by Q2 2025, implying a 25% upside from current levels (as of mid-2023). This target assumes AWS hits its growth projections, Prime adds 30 million new subscribers, and advertising revenue meets expectations.

Risks on the Horizon

No forecast is without risks. Bank of America acknowledges headwinds like regulatory scrutiny (antitrust cases, data privacy laws), economic downturns that could reduce consumer spending, and intensifying competition in cloud and ad markets. For instance, Microsoft’s Azure is closing the gap with AWS, while TikTok’s rise threatens Amazon’s ad dominance.

Conclusion: A Bull Market for Amazon?

Bank of America’s bullish stance hinges on Amazon’s ability to execute flawlessly across its core businesses while navigating external challenges. The 25% AWS growth target, $100 billion revenue milestone, and $50 billion ad revenue are ambitious but achievable if Amazon continues to innovate and expand. Historically, AMZN has delivered when it focuses on customer-centric tech, and 2025 could be no exception.

Investors should monitor AWS’s quarterly performance, Prime’s subscriber growth, and ad revenue trends closely. If these metrics track to expectations, Amazon’s stock could indeed hit $220—or even surpass it. However, the path to that target will require overcoming regulatory hurdles and maintaining its edge in a fast-evolving tech landscape. For now, the bulls have a strong case—and Amazon’s ecosystem remains one of the most dynamic in global commerce.

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