Inc. shares have experienced a remarkable surge of 75% this year, and experts believe that the momentum will continue well into 2024.

Top Pick for Next Year

TD Cowen analyst, John Blackledge, has chosen Amazon's stock (AMZN) as his top large-capitalization internet pick for next year. Blackledge is optimistic about the company's margin trajectory and its potential to accelerate revenue within its Amazon Web Services (AWS) cloud-computing unit.

Operating Income Forecast

Blackledge predicts that Amazon will achieve $58 billion in operating income by 2024, driven by the high-margin AWS and advertising contributions. Furthermore, recent cost cuts are expected to fuel the operating-income momentum for the rest of the business. Blackledge's forecast for this metric is 25% higher than the consensus view.

Untapped Advertising Potential

Blackledge believes that Wall Street is underestimating Amazon's advertising opportunity. As the company prepares to launch ads on Prime Video for all U.S. streaming households next year, it will also offer an opt-out option for $3 a month. Blackledge estimates that this move could generate $1.5 billion to $3 billion in U.S. ad revenue in the first year, along with nearly $800 million in revenue from those who choose to opt out.

Bright Future for AWS

Blackledge anticipates that AWS, Amazon's cloud business, will benefit significantly as enterprises move past recent cost optimizations and prioritize shifting additional workloads to the public cloud. He also expects that generative AI will contribute to driving additional revenue.

Analyst Recommendations

Blackledge rates Amazon's stock as "outperform" and has raised his price target from $180 to $200 in his recent note. He is not alone in his positive view on Amazon. Bernstein analyst Mark Shmulik also named Amazon's stock as his best idea earlier in the week. Shmulik believes that Amazon offers long-term growth and that its operating income is poised for an unprecedented run. He has set a target price of $175 for Amazon shares.

Amazon's stock was up by 1.6% in morning trading on Thursday.

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