Goldman Sachs sees Amazon positioned for outperformance, raises price target

Goldman Sachs has raised its 12-month price target for Amazon to $240 from $220, reiterating a 'Buy' rating, following the company's stronger-than-expected Q2 earnings. The firm cites Amazon's strong positioning for future outperformance, driven by improving eCommerce margins from optimized logistics, robust 8% year-over-year growth in its profitable advertising segment, and the long-term structural demand for AWS, which grew 17.5% year-over-year and is seen as central to the expanding generative AI ecosystem despite some near-term margin pressures. These factors are expected to drive sentiment and revenue growth into 2026.

Analysis

Goldman Sachs has upgraded its 12-month price target for Amazon to $240, reinforcing its 'Buy' rating based on a constructive multi-year outlook following a strong second-quarter earnings report. The firm's confidence is anchored in three primary drivers: first, improving eCommerce margins resulting from a more streamlined logistics network that is successfully lowering unit costs. Second, the advertising segment continues to demonstrate highly efficient and profitable growth, expanding 8% year-over-year. Third, Amazon Web Services (AWS) is positioned to capitalize on long-term structural demand, particularly from the adoption of generative AI workloads. AWS posted 17.5% year-over-year growth, and despite near-term margin pressures and investor desire for more specific details on its AI strategy, Goldman Sachs views the segment as a central driver for sentiment and revenue growth into 2026. The analysis suggests the consumer base remains healthy and that operational efficiencies in fulfillment are set to support sustained margin expansion, solidifying the case for continued outperformance.

Key Decisions for Investors

• Investors may consider the raised $240 price target and 'Buy' reiteration, supported by fundamental strength across eCommerce, advertising, and cloud, as a basis for evaluating or increasing long positions in Amazon.
• It is crucial to monitor upcoming reports for sustained momentum in AWS growth, specifically any new disclosures on generative AI's contribution, as this is a key pillar of the long-term bull thesis.
• Pay close attention to operating margin trends within the eCommerce division to verify that the noted logistics optimizations and cost reductions are translating into durable profitability gains.