Amazon Shares Surge 14% on Blowout Earnings; JPMorgan Lifts Target to $365

Amazon.com Inc. shares surged about 14% in early trading Friday, lifting the Nasdaq and broader market, after the e-commerce and cloud giant posted quarterly results that beat analyst expectations. The rally added to confidence that heavy investments in artificial intelligence are beginning to generate returns.

JPMorgan raised its price target on the stock to $365 from $330, according to a report from NDTV Profit. The revised target implies nearly 40% upside from current levels. The brokerage cited Amazon's expanding margins, accelerating AI monetization, and resilient cash flow as catalysts for a potential record high.

Amazon Web Services (AWS), the company's cloud computing arm, posted revenue of $30.5 billion for the quarter, up 18.8% from a year earlier and ahead of analysts' expectations of about $29.7 billion, NDTV Profit reported. AWS generated operating income of $11.2 billion, translating into an operating margin of 36.7%, reinforcing its position as Amazon's biggest profit engine.

The company reported net income of $35.77 billion, or $4.81 per share, up from $27.23 billion, or $3.65 per share, in the same quarter a year ago, according to NDTV Profit.

"Amazon showed us, without a shadow of a doubt, that the web-services or AI side of the business is driving growth for the company," said Adam Sarhan, chief executive of 50 Park Investments in New York, as reported by Reuters in an article from the Times of India. "Investors are able to look past the free-cash-flow decline because it is one component. If growth continues, it will make up for that shortfall."

The strong report followed similar results from Microsoft and Alphabet earlier this month, which had helped ease investor concerns over the returns from massive AI spending. Microsoft shares rose 1.8% Friday, while Alphabet and Meta each advanced more than 2%. Nvidia climbed 1.3% and Micron added 1.6%.

The tech-heavy Nasdaq Composite advanced 1.0% on the day, closing higher. The S&P 500 gained 0.12% to 7,446.54, and the Dow Jones Industrial Average rose 0.16% to 52,290.32, according to the Times of India.

Gains were tempered by a 7.4% fall in Apple shares after the company cautioned that supply constraints would weigh on growth.

Despite the late-week rebound, the S&P 500 and the Nasdaq remained on track to end July in negative territory after AI-related stocks experienced a steep selloff during the month.

"The earnings picture continues to surprise very much to the upside, especially with Amazon's results, and so I think investors are ignoring the prospect of higher interest rates down the road," said Sam Stovall of CFRA Research, as reported by Channel NewsAsia.

Markets also kept an eye on U.S. Treasury yields, which remained elevated. The yield on 10-year Treasuries advanced six basis points to 4.73%, according to NDTV Profit. The move came after a divided Federal Reserve kept its benchmark interest rate unchanged on Wednesday.

Three dissenting policymakers from the Fed meeting said Friday that rate hikes were needed immediately to avoid entrenched inflation, Channel NewsAsia reported. "Inflation has been too high for too long," said Cleveland Fed President Beth Hammack. "The longer that high inflation persists, the more challenging and costly it can be to bring it back down."

Traders raised the probability of rates remaining unchanged in September to 35%, compared with about 18% a week earlier, according to CME's FedWatch tool, as reported by the Times of India.

JPMorgan analysts highlighted Amazon's growing AI ecosystem as a key long-term growth driver. They noted that the company's proprietary AI chips, including Trainium 2 and Inferentia, are seeing increasing adoption, helping improve AWS profitability. The brokerage also pointed to Amazon's strategic partnership with Anthropic as a catalyst for higher enterprise AI adoption on AWS, supporting future cloud contract growth and valuation expansion.

Crude oil prices continued to rise amid renewed fighting between Iran and the United States. Brent crude traded 1.33% higher at $90.16 per barrel, and West Texas Intermediate was up 2% to $85.25 per barrel, according to NDTV Profit.