Our $225 target price is based on ~30x our updated 2026E GAAP EPS of $7.43. Our TP also implies ~13x our ‘26E EV/EBITDA.  We justify our GAAP EPS multiple given Amazon’s leading position within AWS and eCommerce, its Prime membership base, growing online advertising business, and improving overall margins, and we note our implied 13x EV/EBITDA multiple compares to Amazon’s median FY EV/EBITDA multiple of ~18x over the last 10 years.

Key risks to shares achieving our price target include: (i) Macroeconomic given rising inflation and the impact a recession could have consumer demand; (ii) the potential for Amazon to ramp its investment cycle impacting margin expansion; (iii) greater competition in the Cloud that could impact pricing; and (iv) regulatory risk in the U.S. and Europe, and we note the recently passed Digital Markets Act in Europe.