Wall Street sets Apple and Amazon price targets for next 12 months

Apple's fiscal Q3 results surpassed expectations with nearly 10% revenue growth to $94 billion and record Services revenue of $27.4 billion, prompting analyst price target increases and a 1.49% pre-market stock gain. Conversely, Amazon's Q2 revenue of $168 billion and profit of $19.2 billion exceeded estimates, yet the stock declined 8.30% due to investor apprehension regarding the 18% growth of its AWS cloud business, which, while meeting expectations, lagged the acceleration seen by competitors, despite analysts pointing to retail strength and potential AI-driven AWS growth.

Analysis

Apple (AAPL) and Amazon (AMZN) both reported quarterly results that surpassed consensus estimates, yet their stocks experienced sharply divergent pre-market reactions. Apple's fiscal third-quarter revenue grew nearly 10% to $94 billion against an $89.2 billion estimate, with earnings per share of $1.57 also beating expectations. A key driver was the Services division, which achieved record revenue of $27.4 billion, now constituting nearly 30% of the company's total revenue. This performance, coupled with solid iPhone results, prompted multiple analyst price target increases, with BofA and Morgan Stanley raising targets to $240, and the stock gained 1.49% in pre-market trading. Conversely, Amazon's stock fell 8.30% despite its second-quarter revenue of $168 billion and profit of $19.2 billion both beating forecasts. The negative sentiment stemmed from its AWS cloud division, which, while meeting expectations with 18% growth, failed to show the acceleration demonstrated by competitors Microsoft and Alphabet. This overshadowed strength in Amazon's retail business, where unit growth accelerated to 12% year-over-year. Despite the stock's decline, analysts largely reiterated their conviction, raising price targets as high as $275 based on the potential for AI to re-accelerate AWS growth and the ongoing strength in retail.

Key Decisions for Investors

• The market's contrasting reactions underscore the importance of segment-level performance; Apple was rewarded for its high-margin Services growth, while Amazon was penalized for the relative deceleration in its critical AWS division despite a headline beat.
• For Apple investors, the sustained, record-breaking growth of the Services segment is a primary bullish indicator, suggesting a successful pivot to a more recurring, high-margin revenue model that supports higher valuation multiples.
• The 8.30% decline in Amazon's stock presents a potential dislocation, forcing investors to weigh the current AWS growth concerns against bullish analyst price targets that are contingent on future AI-driven catalysts and continued retail momentum.
• Monitor AWS growth rates in subsequent quarters relative to peers like Microsoft and Alphabet, as this will be the primary determinant for a reversal in Amazon's negative stock performance.