Rosenblatt Initiates Amazon Buy Rating, Says AI Position Underappreciated

Amazon.com Inc shares fell Thursday despite Rosenblatt initiating coverage with a Buy rating and a $335 price target. Here's what you need to know.

Amazon.com shares face resistance. Why is AMZN stock trading lower?

Rosenblatt Initiates Amazon Buy Rating, Says AI Position Underappreciated by Market

Rosenblatt analyst Scott Devitt initiated coverage on Amazon with a Buy rating and a $335 price target, implying roughly 26% upside from the current share price of about $262.50.

Devitt argued that Amazon's position in artificial intelligence has not received sufficient recognition from the market. AWS is central to this thesis: he projects the cloud unit will grow 45% by end-2026, surpassing Wall Street's 38% estimate, with annual revenue exceeding $335 billion by 2028. The forecast is based on AWS's 37% year-over-year growth in the second quarter, marking its fifth consecutive quarter of accelerating growth.

Devitt tied this acceleration to a feedback loop, arguing that as customers increase spending on AI tools, they ultimately use more of AWS's core cloud services, adding incremental growth on top of already-accelerating expansion. He noted Amazon as one of the more stable companies in his coverage, pointing to its portfolio of computing infrastructure and its physical fulfillment network as advantages that are difficult to replicate.

Amazon Chart Shows Broader Uptrend

Despite today's decline, Amazon's long-term technicals remain intact. The stock trades about 10% above its 200-day moving average of $238.31 and holds above the 50-day moving average of $249.35, with the trend still pointing upward despite the lower session. The stock also hovers above the 20-day moving average of $260.14.

The relative strength index stands at 52.36, a neutral reading consistent with the stock digesting recent gains rather than pushing forcefully in either direction. Such readings typically point to a balance between buyers and sellers, rather than the stock being overbought or oversold.

Amazon remains below its 52-week high but well above its 52-week low, and traders may view this position as a pullback within a larger uptrend unless key support levels begin to fail. The May golden cross continues to underpin the bullish backdrop, although the stock is digesting the August high.

Traders are watching $287 as resistance, near the 52-week high, and $226 as support, a prior demand zone well below the current price that would become more relevant if the trend weakens.

AMZN Stock Declines

AMZN price action: Amazon.com shares were down 1.24% to $262.55 at the time of writing Thursday.