AMZN Stock Is Cheaper Than WMT And GOOGL — Why Jefferies Calls Amazon A Top Pick Among Hyperscalers

• Jefferies maintained a Buy rating on Amazon with a $320 price target, implying 29% upside from Wednesday’s close.
• The firm said Amazon trades at a valuation discount to both Walmart and Alphabet based on forward EV/EBITDA multiples.
• Wall Street remains bullish on Amazon, with 62 of the 65 analysts carrying a ‘Buy’ or ‘Strong Buy’ rating, according to Koyfin.

Amazon.com Inc. (AMZN) may not be cheap on an absolute basis, but Jefferies believes it offers a more attractive valuation than Walmart Inc. (WMT) and Alphabet Inc. (GOOGL) for investors seeking exposure to artificial intelligence infrastructure and retail.

The brokerage reiterated its ‘Buy’ rating on the stock with a $320 price target, implying 29% upside from Wednesday’s close.

Shares of Amazon ended Wednesday’s regular session about 3% higher. The AMZN stock continued its gains in after-hours trading, edging up another 0.09% at the time of writing.

Jefferies Sees Amazon Trading At A Discount

Jefferies said Amazon is valued at roughly 12 times its expected earnings before interest, taxes, depreciation and amortisation over the next 12 months, making it less expensive than comparable retail and technology companies.

“At ~12x [next 12 months] EV/EBITDA, AMZN trades at [a one-third] ... discount to 18x blended GOOGL 17x / WMT 19x and is a top pick among hyperscalers,” Jefferies wrote in a note to clients, according to a report in CNBC.

The firm added that Amazon’s modest share price performance over the past three months has “only cheapen[ed] an already attractive entry,” making the current valuation an appealing opportunity for investors.

AI Data Center Expansion Seen As Key Catalyst

Jefferies expects Amazon’s artificial intelligence-driven data center investments to provide another tailwind, particularly if the company increases its capital expenditure guidance this year.

“Our expert called the current buildout unprecedented & believes [estimates of Amazon's capital expenditure and free-cash flow for the full year] ... may still be understated," the Jefferies analyst said.

AMZN Stock: What Stocktwits Retail Sentiment Says

Retail sentiment for AMZN on Stocktwits improved to ‘bullish’ from ‘neutral’ in the last 24 hours, while message volume was ‘low.’

Wall Street remains overwhelmingly bullish on the stock. According to data from Koyfin, 62 of the 65 analysts covering AMZN rate it ‘Buy’ or ‘Strong Buy,’ while three rate it ‘Hold.’ The 12-month average target on the stock is $314.27, representing a potential upside of around 27% from Wednesday’s close.

AMZN stock has risen nearly 10% year-to-date.

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