Key Takeaways
- Scott Devitt of Rosenblatt Securities boosted Amazon’s price target from $335 to $360, suggesting 46% potential gains.
- The analyst argues concerns about AI shopping tools like Muse and Dots threatening Amazon’s advertising model are exaggerated.
- Since Meta’s Muse debut on September 8, Amazon shares have declined roughly 4%.
- Amazon has restricted Muse’s access to its platform as a protective measure.
- Shares climbed 0.6% to reach $247.22 on Wednesday, bringing year-to-date gains to approximately 7%.
Amazon stock finished Wednesday’s session at $247.22, marking a 0.6% daily increase. The uptick followed Rosenblatt Securities analyst Scott Devitt’s decision to lift his price objective on the e-commerce giant from $335 to $360.
Devitt’s revised target represents potential upside of 46% compared to Tuesday’s $246.67 closing level. His Buy recommendation remains unchanged.
The analyst’s note tackles mounting concerns circulating through investment circles. Market participants have grown increasingly anxious that emerging AI-powered shopping assistants might undermine Amazon’s lucrative retail advertising operations.
Meta Platforms introduced its proprietary AI agent, Muse, on September 8. OpenAI subsequently released a comparable product named Dots.
These intelligent agents handle browsing, product comparisons, and purchases on behalf of users. This functionality potentially eliminates clicks that typically generate advertising income for Amazon.
Since Muse’s introduction, Amazon shares have dropped approximately 4%. The stock also sits 13% below its August 3 peak of $284.02.
Devitt, however, rejects the pessimistic outlook. In Wednesday’s research note, he characterized worries about Amazon’s advertising model being undermined as “false.”
The Case for Optimism
Devitt highlighted Amazon’s track record of successfully adapting to evolving consumer patterns. The corporation has previously navigated comparable disruption concerns, he emphasized.
The analyst also observed that Amazon currently integrates sponsored advertisements within its proprietary agentic shopping experiences. This integration provides a competitive edge versus external AI platforms.
Additionally, the company is developing “Alexa for Shopping,” an AI-driven assistant engineered to handle the complete purchasing journey. According to Devitt, this initiative seeks to “own the entire funnel from intent to checkout.”
Amazon has taken steps to prevent Meta’s Muse from operating on its platform. Devitt interprets this action as a strategic defensive maneuver that allows Amazon to maintain control over shopping engagement.
Amazon’s Information Edge
External AI agents currently lack access to Amazon’s comprehensive inventory and pricing information. Devitt believes this limitation creates a substantial barrier that competing AI solutions will struggle to overcome in the near future.
He contended that Amazon’s sophisticated personalization capabilities and extensive historical shopper data ensure customers continue initiating searches on Amazon’s native platform. According to Devitt, reduced ad clicks don’t necessarily translate to diminished revenue.
Should the remaining interactions lead to higher-value purchases, Amazon may actually benefit financially. Devitt further noted that any advertising revenue impact would likely constitute a minor portion of Amazon’s diversified business portfolio.
Devitt’s fundamental assessment maintains that Amazon “can navigate this period of transition largely unaffected.” He identified no immediate modifications to Amazon’s projections or business operations connected to the AI agent phenomenon.
As of Tuesday’s market close, Amazon stock has advanced roughly 7% year to date. Despite Wednesday’s positive movement, shares continue trading considerably below their August highs.
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