Investors are underestimating the boost artificial intelligence will give to Amazon , according to Evercore ISI. Analyst Mark Mahaney named Amazon his new large-cap top pick, saying that the megacap tech stock appears attractively valued after its recent slide. The analyst shifted the online retailer to the No. 1 position, while moving Uber to No. 2. “Shares traded off on the Q4 print, but we viewed that as an Expectations Correction and not a Fundamentals correction,” Mahaney wrote on Wednesday. “We are also focused on two new product catalysts with the pending Alexa+ and Kuiper launches, and we believe there is an opportunity for a material narrative shift (to the positive) for AMZN as an excellent thematic play on robotization and on AI Cloud services, with the potential for Gen AI workloads to drive an acceleration in AWS revenue in H2:25,” Mahaney said. AMZN 1D mountain Amazon Amazon shares have underperformed this year, falling more than 5%, along with the overall Magnificent Seven trade. Investor optimism in the megacap hyperscalers dimmed given the high valuations and after the release of DeepSeek prompted fears of greater competition in the sector. The analyst’s $210 price target represents just a marginal increase from Wednesday’s close of $208.36 for the stock. What’s more, in its Feb. 6 earnings report, Amazon issued disappointing guidance for the current quarter. Since then, the stock is down more than 12%. Still, Mahaney remains a believer in large-cap internet companies after the latest earnings season for three reasons. He said the “Return on Artificial Intelligence” story is starting to bear out, on top of the strength of overall demand trends among internet companies, as well as continued cost-cutting in the sector, that will boost margins. “The substantial number of successful AI deployment datapoints – successful in boosting engagement, monetization, cost efficiencies, etc. – suggests that the ROAI is proving out,” Mahaney wrote. In Amazon’s case, he noted, its Amazon Web Services’ AI business is now a multi-billion dollar revenue run rate business that’s growing three times faster than its Cloud business did at the same stage. Additionally, AI-driven automation is improving cost to serve at its most advanced distribution sector, he said.
