UBS analysts raised the firm's price target on Buy-rated Amazon (NASDAQ:AMZN) to $150 from $130 in a note Thursday.
Analysts told investors that generative artificial intelligence (AI) could show up at Amazon Web Services (AWS) by the fourth quarter.
"We see room for AMZN shares to move higher as AWS reaccelerates in 4Q as Bedrock expands," analysts wrote. " Our May 24th AI day, combined with other channel feedback, make us more sanguine on AWS prospects in GenAI."
"Increasing compute demand, particularly as Bedrock expands later this year, should drive acceleration in 4Q, which we move higher."
Analysts also believe Amazon will benefit from incumbency status and the potential commoditization of LLMs.
"While AWS is coming from behind on LLMs, our checks suggest that FMs could be commoditized, which would benefit AWS. Channel contacts expect AWS to catch up quickly in its LLMs and AI focused chips, which should see plenty of demand regardless given shortages," they added.