Amazon Analyst Names 4 Key Pillars Supporting Advertising Opportunity in 2024

Amazon.com, Inc. (NASDAQ:AMZN) stock gained good ground this year, up 78% on a YTD basis (as of Dec. 21, 2023). It is the most valuable company of 2023.

Wedbush expects Amazon to clock $46.5 billion in advertising revenue in 2023. It sees the company well-positioned to continue taking a share of global digital advertising spending over a multi-year period.

The Amazon Analyst: Scott Devitt has an Outperform rating on Amazon. The price target on the stock was raised from $180 to $210.

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The Amazon Thesis: Devitt believes “Amazon’s advertising opportunity remains early in its development.”

The company’s long-term advertising revenue potential is limited by available ad inventory on its properties and the investment capacity of its vendors and third-party sellers. With advertising revenue nearing 7% of gross margin value (GMV), investors will debate the maturity of on-platform opportunities and the viability of off-platform initiatives in a competitive digital advertising landscape.

They see Amazon’s advertising opportunities ahead in 2024 supported by:

• Secular tailwinds favoring retail media
• Growth in CTV and video ad formats within Amazon's properties
• Growth of off-platform ad sales
• Greater adoption of Amazon's advertising products among non-endemic advertisers

These initiatives should broaden Amazon’s long-term addressable market and enable monetization beyond its core marketplace.

Wedbush sees “a path to $100B+ of AWS revenue in 2024, $100B+ of FCF in 2026, and $100B of advertising revenue in 2028” for Amazon.

AMZN Price Action: Amazon’s stock was trading at $151.28 at the time of publication Thursday.

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