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Amazon (AMZN) reports its third-quarter earnings on October 30. Wall Street analysts are lining up with bullish calls on the stock.

KeyBanc analyst Justin Patterson initiated coverage yesterday with a Buy rating. He set a price target of $300, which represents over 35% upside from current levels.

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Patterson thinks investors are being too negative about the cloud business. He sees this as a buying opportunity. The analyst expects cloud growth to accelerate into 2026.

He also highlighted Amazon’s advertising business. This segment is helping boost retail profits. Patterson noted that grocery sales could become more important in coming years.

The stock’s valuation caught his attention too. Amazon currently trades well below its historical average. This adds to the case for buying now.

Stifel analyst Mark Kelley also raised his price target. He moved it from $260 to $269 while keeping his Buy rating. This implies over 20% upside.

Kelley referenced management’s second-quarter commentary. Average sales prices haven’t increased much. This kept his estimates largely unchanged for the third quarter.

Wall Street Expectations

Analysts expect earnings per share of $1.57 for the third quarter. That would mark 9.7% growth compared to last year. Revenue is projected at $177.85 billion, up 12% year-over-year.

The consensus rating stands at Strong Buy. TipRanks shows 41 Buy ratings issued in the last three months. The average price target sits at $269.03.

Amazon has underperformed this year. The stock is up just 0.8% year-to-date. That makes it the weakest performer among the Magnificent Seven stocks.

The company trades at 29 times forward one-year earnings. This represents a discount to historical averages.

E-Commerce Improvements

E-commerce still accounts for about two-thirds of total sales. That’s over $100 billion in the second quarter alone.

Both online stores and third-party sales grew 11% in the second quarter. Management expanded same-day or next-day delivery to 4,000 smaller regions.

The company added new brand partnerships. These include Estée Lauder’s Origins cosmetics and a specialized Nike storefront.

Amazon has been working on inbound channels to regional distribution centers. Orders going straight from fulfillment to delivery without extra stops increased 40% year-over-year.

Distance traveled per package declined 12% on average. Handling touches per unit dropped almost 15%.

CEO Andy Jassy said these actions are making the entire distribution system more efficient. However, he acknowledged uncertainty around how tariffs will impact the business.

Cloud and AI Business

AWS revenue grew 17.5% year-over-year in the second quarter. Some investors have concerns about the growth rate compared to competitors.

But AWS remains larger than any other cloud services provider. The recent AWS outage showed how much of the internet depends on its services.

Amazon’s AI business is growing fast. It has a $123 billion annualized run rate as of the second quarter.

Jassy said the company will continue investing in chips, data centers, and power. Management sees an unusually large opportunity in generative AI.

Guidance and Outlook

Management guided for third-quarter sales between $174 billion and $179.5 billion. That represents 10% to 13% growth year-over-year.

Operating income is expected at $15.5 billion to $20.5 billion. Last year’s third quarter saw $17.4 billion in operating income.

Kelley noted that stable consumer spending helps the outlook. Same-day grocery delivery expansion for Prime members could provide additional upside for 2026.

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