Wall Street is keeping its faith in Amazon.com Inc., the only megacap technology stock with unanimous analyst buy ratings, even after the e-commerce giant lagged behind its peers by a huge margin for the past 18 months.
Morgan Stanley grew more optimistic on the shares after their worst annual performance since 2014, raising its price target Monday and foreseeing 30% upside. Bank of America Corp., meanwhile, named Amazon its top pick for 2022. The firms are among the almost 60 banks and brokerages that follow the company, and every single one of them recommends buying the stock — a fan base no other trillion-dollar technology peer has.
Analysts are willing to look past Amazon’s recent sluggishness — the stock rose 2.4% in 2021 — in part because the company has rewarded investors so handsomely since it was founded by Jeff Bezos in the 1990s. The shares have returned an average of 36% a year since it went public in 1997, versus 9.2% for the S&P 500.
“The underperformance should not be mistaken as something underlying is wrong,” said Peter Garnry, head of equity strategy at Saxo Bank. The company is laying the groundwork for future returns, he said: Amazon has invested almost $100 billion in the last two fiscal years, which is more than the company’s combined investments since its founding to 2019.