Amazon Stock Has Room to Run. 2 Analysts Raise Price Targets Before Earnings.

Amazon is expected to report second-quarter earnings on or around July 31. (ALFREDO ESTRELLA/AFP via Getty Images)

Amazon.com stock has had an underwhelming year, but analysts from Morgan Stanley and J.P. Morgan believe the shares have much more room to run in the months ahead.

The analysts raised their price targets, citing confidence in Amazon’s growth opportunities for both e-commerce and cloud computing unit AWS.

Shares were up 1.1% to $224.74 on Friday.

Morgan Stanley’s Brian Nowak increased his price target late Thursday from $250 to $300, which implies a 33% increase from the stock’s previous close of $226.26. Nowak, who rates Amazon as Overweight, believes the stock has “significant upside” if the company can continue to gain market share in e-commerce despite ongoing economic uncertainty, and if AWS growth can reaccelerate.

Amazon shares have risen 2.3% this year, underperforming the 6.3% increase of the S&P 500.

Wall Street has two big concerns: consumer spending risks because of tariffs, and cloud revenue growth. Amazon reported first-quarter AWS revenue growth of 17% from the prior year, which lagged behind rivals Microsoft and Alphabet.

When it comes to tariffs, CEO Andrew Jassy said on the May earnings call the company hadn’t seen any slowdown in demand yet, but “we’ve seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact.”

Much has changed since then, with President Donald Trump actively announcing new trade policies this week. Still, Nowak believes Amazon is in a solid spot to compete.

“Expect AMZN’s scale, buyer/seller advantages, logistics leadership and marketplace structure to enable the company to weather any challenges/take share,” Nowak wrote.

J.P. Morgan’s Doug Anmuth also raised his price target on Amazon to $255 from $240 and maintained an Overweight rating. He believes the company has more room to grow AWS customers, as “only ~10% of IT spend is in the cloud today.”

“High-growing AWS and Advertising revenue streams are AMZN’s most
profitable businesses, further supporting margin expansion & FCF generation,” Anmuth wrote on Friday.

Amazon is scheduled to report second-quarter earnings on or near July 31.

Write to Angela Palumbo at angela.palumbo@dowjones.com