Capital spending triggers a trust crisis? Institutions such as Morgan Stanley support: Amazon.com, Inc. (AMZN.US) is the most underestimated AI all-around winner.

After the updated capital expenditure guidance from Amazon.com, Inc. (AMZN.US) led to continuous decline in stock prices, Wall Street analysts quickly came to its defense with bullish views. Bank of America Corp maintained a "buy" rating for Amazon.com, Inc., but lowered the target price to $275. Analyst Justin Post pointed out that the return on capital expenditures has become the primary driver affecting the stock performance. He emphasized, "Although the ramp-up phase of capacity may lead to increased profit margin fluctuations in the coming quarters, we believe that with the continuous penetration of artificial intelligence business in cross-industry scenarios, this additional capacity will be fully unleashed, thereby helping Amazon.com, Inc. consolidate its competitive advantage in highly attractive strategic areas." Morgan Stanley maintained a "hold" rating for Amazon.com, Inc. and a target price of $300. Analyst Brian Nowak specifically pointed out that AWS is showing accelerated growth and is expected to further increase in the future, while the retail business continues to fulfill promises and show results in efficiency optimization. He further explained, "Indeed, Amazon.com, Inc. is making strategic investments in areas such as AWS, retail, and low-orbit satellites, but its outstanding performance in return on invested capital (ROIC) in the past keeps us firm in our bullish view on this underestimated overall winner in the field of generative AI." Royal Bank of Canada reiterated an "outperform" rating for Amazon.com, Inc. with a target price of $300. Analyst Brad Erickson also expressed optimistic expectations after Amazon.com, Inc. released its financial report, stating that the overall report showed a steady trend and that the AWS business is accelerating in growth. He emphasized, "Among the tech sector companies we track, Amazon.com, Inc. is still the most undervalued large-cap stock. With the continuous strengthening of the rationality of return on invested capital (ROIC), its leadership position in the field of artificial intelligence will become increasingly prominent." Regarding specific financial forecast adjustments, Erickson added, "Due to the revenue guidance increase for AWS, we have adjusted our revenue forecasts accordingly; due to cost optimization for the low-orbit satellite project, we have slightly lowered EBIT and EPS expectations; at the same time, considering the expansion of capital expenditures, we have moderately lowered free cash flow forecasts." Wade Bush Securities maintained an "outperform" rating for Amazon.com, Inc., but lowered the target price to $300. Analyst Dan Ives pointed out that the latest revenue guidance from Amazon.com, Inc. shows positive signals. He analyzed, "Considering that the company has surpassed the upper limits of guidance for multiple quarters in a row, we believe that the management's guidance this time may have a moderately conservative tendency." Despite the current large scale of capital expenditures, the Ives team remains bullish on the investment value of Amazon.com, Inc. They emphasized, "We see several structural opportunities for sustainable margin improvement, including fulfillment network efficiency optimization, business structure leaning towards high-margin AWS cloud services and advertising business, and other long-term driving factors." As of the time of writing, Amazon.com, Inc. stock fell over 8% in pre-market trading on Friday, trading at $204.88.