Amazon's stock is primed for a 40% rally, according to this bull who has named it his top pick

By Emily Bary

Amazon faces tough competition but should be able to defend its twin fortresses, says a BNP Paribas analyst

Amazon's low cost of computing could come to benefit its cloud business - and its stock - according to BNP.

Amazon.com Inc. dominates e-commerce and the cloud. But can it hold those positions as competition intensifies?

BNP Paribas analyst Nick Jones thinks so, writing positively of Amazon's (AMZN) ability to defend its fortresses to the benefit of its stock. Jones's $320 price target implied room for shares to run more than 40% higher.

Jones deemed Amazon's stock his top pick in the e-commerce sector, initiating coverage Monday with an outperform rating.

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In retail, Amazon has various advantages that can amount to more gains, Jones noted, pointing to the company's sheer scale, logistics network and its Prime loyalty program.

"A relentless focus on low cost to serve (i.e. fulfillment), convenience, low prices and selection, positions the company to continue gaining share," he wrote.

Plus, the company is sitting on "a lucrative incremental growth opportunity" as it moves forward with an expansion of its grocery ambitions. The company is targeting a presence in 2,300 cities by the end of the year, up from 1,000 as of this summer.

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Jones also wrote positively about Amazon's potential in the automotive category over the long run. Last year, the company launched Amazon Autos, a platform for researching, ordering and financing Hyundai vehicles within 48 cities. "Given Amazon's scale, customer mindshare in other categories and established logistics and marketplace infrastructure, we view the company as well positioned should it choose to further penetrate the autos category," Jones wrote.

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Then there's the cloud, where Amazon owns the largest slice of market share but faces competition from Microsoft Corp. (MSFT), Alphabet Inc. (GOOG) (GOOGL) and even Oracle Corp. (ORCL). Jones said Amazon's AWS will still be able to win.

"A key concern for investors today is that Amazon may have underinvested in AI, leaving the door open for Microsoft's cloud business to catch up to Amazon's position in the coming years, in terms of revenue," he wrote. "Even in that scenario, we continue to believe AWS is well-positioned to maintain a leadership position given its scale breadth of services, and enterprise relationships, and we see it as strongly positioned to drive continued share gains over time."

Jones noted that Amazon's focus on a "low cost to serve" applies to the cloud, so offering the lowest cost of compute could yield benefits for the stock over time.

Finally, he explored Amazon's advertising business as an "underappreciated growth driver" - and with high margins to boot.

The company's technology is "industry leading and nearly impossible to replicate given the company's robust offering to consumers," setting up Amazon to deliver strong outcomes for marketers.

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-Emily Bary

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11-24-25 1401ET