Loop Capital increased their price target for Amazon (NASDAQ:AMZN) to $225 from $215, reaffirming their Buy rating on the stock. This decision comes as Amazon Web Services (AWS) shows renewed growth and retail profits are believed to be significantly underestimated.

Following a robust first-quarter report for Amazon's retail and cloud businesses, Loop Capital analysts revised their forecast. They highlighted that the retail segment contributed to over half of the profit increase, driven by strong services and improved efficiency in costs. The firm believes that current consensus estimates don't accurately reflect Amazon's recovery and expects that profit gains will continue to outpace estimates for some time. Loop Capital's forecast projects a retail segment margin about 50 basis points higher than the consensus for 2024 and 2025, though they believe this still falls short of their assessment of the company's potential.

AWS achieved its highest-ever margin due to accelerating revenue and controlled costs, along with changes in accounting for server depreciation. Generative artificial intelligence has also emerged as a significant growth opportunity, contributing to a multi-billion-dollar revenue run rate.