Morgan Stanley called Amazon.com, Inc. (AMZN.US) the "most underestimated winner in generative artificial intelligence" and maintained a "hold" rating.

Morgan Stanley stated that Amazon.com, Inc. (AMZN.US) remains its top pick, and believes that Amazon.com, Inc.'s cloud services and retail business are undervalued beneficiaries of generative artificial intelligence. The firm maintains its "overweight" rating on Amazon.com, Inc. with a target price of $300. Amazon.com, Inc.'s stock price rose over 2% on Wednesday. Morgan Stanley analyst Brian Nowak and his team pointed out that Amazon.com, Inc.'s current stock price corresponds to a 19 times GAAP earnings per share in 2027, implying a forward earnings growth rate of around 20%; based on the PEG calculation, it is discounted by about 40% compared to the industry. Despite doubts in the market about the return on investment in AI-related capital expenditures, the firm believes that Amazon.com, Inc. is the "most undervalued GenAI (generative artificial intelligence) winner" among the companies it covers. Analysts believe that Amazon.com, Inc.'s cloud services and retail business are both in a favorable position to drive and benefit from technological advancements and changes in consumer behavior. Looking ahead, Amazon.com, Inc. has two key catalysts that are expected to drive valuation recovery and reshape investor confidence in its ROIC. One is the expectation that Amazon.com, Inc.'s cloud services will achieve growth of over 30% and maintain a strong order backlog. Despite short-term growth being constrained by the pace of computing power and data center deployments, analysts are confident in its underlying demand and optimistic about the supportive role of continued investment in data centers for long-term growth. The other is "agent-based e-commerce." Morgan Stanley believes that Amazon.com, Inc. will expand its advantage in vertical areas through AI shopping assistant Rufus, and form synergies with horizontal agents such as OpenAI, Gemini, and Meta (META.US), further enhancing consumer value and penetration with comprehensive and accurate product and price comparisons, rich SKU offerings, and efficient delivery.