Ray Charles isn’t the only one with Georgia on his mind. Amazon (AMZN) is pretty fond of the place, too.
The Seattle-based company tech giant said on Jan. 7 that its Amazon Web Services plans to invest about $11 billion to expand its infrastructure in Georgia to support cloud computing and AI technologies.
Related: Analysts revamp Amazon stock price target after AWS AI update
“Generative AI is driving increased demand for advanced cloud infrastructure and compute power, and AWS’s investments will support the future of AI from data centers in Georgia,” the company said in a statement.
Amazon CEO Andy Jassy has touted the success of Amazon Web Services. (Photo by Thos Robinson/Getty Images for The New York Times)
Thos Robinson/Getty Images
Amazon said it has invested $18.5 billion in Georgia since 2010 and contributed $20.1 billion to the state’s gross domestic product.
The latest investment is expected to create at least 550 jobs and is yet another example of big tech’s big plans for AI.
Amazon CEO touts cloud services
Amazon, Microsoft (MSFT) , Facebook parent Meta Platforms (META) , and Alphabet (GOOGL) , which owns Google, are expected to spend upward of a quarter trillion dollars, mainly toward AI infrastructure this year, according to Forbes.
In the first half of 2024, Big Tech spent nearly $104 billion, a 47% year-over-year increase, Forbes reported. Through the third quarter that sum surged to $170 billion, up 56% YoY.
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Microsoft expects to spend $80 billion in fiscal 2025 to build data centers that can handle artificial intelligence workloads, the software giant said in a Jan. 3 blog post. More than half the expected AI infrastructure spending will take place in the U.S
AWS has certainly paid off for Amazon, generating $27.5 billion in revenue in the third quarter of 2024, a 19% increase year-over-year. That’s about a sixth of Amazon’s total revenue of $158.9 billion, which was up 11% from the year-earlier quarter.
During Amazon’s third-quarter earnings call in October, CEO Andy Jassy told analysts that “we’ve seen significant reacceleration of AWS growth for the last four quarters.
“The AWS team continues to make rapid progress in delivering AI capabilities for customers in building a substantial AI business. In the last 18 months, AWS has released nearly twice as many machine-learning and [generative AI] features as the other leading cloud providers combined.”
Amazon, which is scheduled to report quarterly results next month, has seen its shares climb about 53% from a year ago.
Cantor Fitzgerald lifts Amazon stock price target
Investment firms have been issuing research reports on Amazon recently.
Cantor Fitzgerald analyst Deepak Mathivanan raised the investment firm’s price target on Amazon to $270 from $240 and affirmed an overweight rating on the shares as part of a broader note on internet stocks.
The fundamental backdrop for internet stocks remains healthy entering 2025, despite emerging risks like President-elect Donald Trump’s tariff proposals, the firm says.
Related: CEO of popular retailer identifies major Amazon weakness
The pace of innovation in areas such as AI, autonomous vehicles, robotics and quantum computing is accelerating, the analyst said.
Mathivanan said he expected digital ads, e-commerce and mobility to deliver strong growth and margin expansion in 2025.
Amazon is one of the firm’s top picks for 2025 to play the accelerating AI deployment theme.
Wedbush and Loop: upside for Amazon shares
Wedbush analyst Scott Devitt raised the firm’s price target on Amazon to $260 from $250 and maintained an outperform rating on the shares while naming it a top pick for 2025.
Devitt said investors underappreciate the pace of operating income growth and the improving trends at AWS, which have resulted in four consecutive quarters of accelerating cloud growth.
Amazon’s operating-income growth is best-in-class among megacap internet peers. Wedbush said that it expected Amazon to grow operating income 24% year-over-year in 2025, above both Google and Meta Platforms.
Loop Capital analyst Rob Sanderson reiterated a buy rating and $275 price target on Amazon while forecasting further upside for the stock in 2025.
In addition to the long and exciting period of robust demand anticipated for AWS, the margin outlook on Amazon is also highly favorable for its retail segment, the firm said.
The company’s five-day-per-week return-to-office mandate is also taking effect in most locations. That, Loop said, will lead to some attrition that likely will skew toward highly compensated employees. While this is difficult to quantify, it will provide a tailwind to profit margins in 2025, Loop said.
Amazon’s RTO policy is being met with frustration from working parents, who valued the flexibility and cost savings they grew used to during years of remote and hybrid work, according to GeekWire.
Related: Analyst resets Amazon stock forecast on huge ‘moonshot’
In a statement to GeekWire, Amazon said it recognized people will sometimes need the flexibility to work from home. For those occasions, “employees should communicate with their manager — just as they would have prior to the pandemic.”
The return-to-office trend appears to be gathering momentum.
On Jan. 7, Bloomberg reported that JP Morgan Chase was preparing to tell all its employees to return to the office five days a week, ending a hybrid-work option for thousands of staffers.
Recent surveys indicated that 23% of U.S. companies require employees to be in the office for a full five-day workweek. Most companies opt for a hybrid model requiring workers to be present for three days per week
Meanwhile, a Resume Builder survey found that one of every five workers isn’t following their company’s RTO policy.
Twenty percent of workers said they would be very likely to leave if companies start cracking down on compliance and an additional 33% are somewhat likely to follow suit.
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