Why Amazon's stock could be 2024's biggest winner among major internet names

By Emily Bary

Piper Sandler analyst becomes the latest to name Amazon's stock his top pick for next year

Amazon.com Inc. shares offer the most upside among large-capitalization internet companies going into next year, an analyst wrote Thursday.

Piper Sandler's Thomas Champion just dubbed Amazon's stock (AMZN) his top large-cap pick for 2024, citing the e-commerce giant's potential to improve retail margins and generate strong momentum in the cloud.

"Retail margins have improved significantly, and we still think Street [operating income] looks conservative into [2024] on incremental numbers," Champion wrote.

He also thinks spending on Amazon Web Services, the company's cloud-computing service, is poised to accelerate next year, and a recent Piper Sandler survey of chief investment officers helped back up that belief. The only cloud provider to see an increase in net spending intentions relative to the first half of 2023 was AWS, Champion noted.

He joins analysts from TD Cowen and Bernstein, who also have dubbed Amazon's stock their best pick.

Champion lifted his price target to $185 from $170 in his latest note, with the new target implying roughly 25% upside from current levels. By contrast, his $355 price target on Meta's stock (META) implies just 7% upside, while his $150 target on Alphabet Inc. shares (GOOG) (GOOGL) implies 14% upside.

See more: Amazon's stock cheered as 2024 top pick - even after a 75% jump this year

Among smaller internet companies, Pinterest Inc. (PINS) is Champion's top pick. Pinterest is closing out 2023 on a strong note, with shares up 25% since the end of October. And exiting the third quarter, Pinterest was likely increasing its revenue at a mid-teens rate on a year-over-year basis.

Champion sees beatable Wall Street targets for Pinterest moving to 2024. Plus, he's upbeat about the company's ability to drive incremental margin improvements, with estimates there also appearing conservative.

-Emily Bary

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12-16-23 1023ET

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