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Retail-Internet Rises 80 Ranks(From 109 to 29):

Retail-Internet

Core Logic & Market Space:

Amazon continues to expand its addressable market through e-commerce share gains, accelerating AWS cloud services, and AI-driven shopping agents. Amazon is now the second-largest grocery retailer in the U.S., with grocery GMV exceeding $150 billion. Fresh groceries now occupy 6 of the top 20 best-selling items on Amazon.com. Same-day orders containing perishables average more than 3x the units per order compared to non-perishable orders. AI agentic shopping is accelerating, with over 350 million customers using Alexa for Shopping in the past 12 months; active users nearly doubled in Q2, and interactions grew over 5x YoY. Morgan Stanley sees Amazon as one of the best-positioned companies for the agentic commerce era, with its high-margin businesses (AWS, advertising) driving profitability while enabling continued investment in last-mile delivery, grocery, Prime Now, and more.

Market Dynamics:

Amazon delivered a strong Q2 earnings beat: AWS accelerated to 37% growth (fastest in 18 quarters), revenue reached $200.6B (+20% YoY), and operating profit came in at $27.5B, well above the $25.5-26B consensus. AWS operating margin expanded to 39% (from ~38% last quarter), and AI revenue run-rate surged from $15B to $25B annualized quarter-over-quarter. E-commerce channel data indicates Q2 sales growth of ~11%, above the recent 5-6% range. Morgan Stanley maintains Overweight with a $335 PT (30% upside), raising FY27/28 EPS by 2%/3%, citing AWS's "Rule of 70" (growth + margin ≥ 70%) and ROIC delivery. UBS maintains Buy but lowered its PT to $305 (from $333), citing higher capex and component cost assumptions for 2027 despite a stronger AWS outlook. Bernstein raised its US e-commerce forecasts, estimating Q2 sales growth of 11%, and expects strong results from Etsy, eBay, and Wayfair as well.

Stock Views (US Stocks):

• Amazon.com, Inc.(AMZN.US) : Morgan Stanley rates Overweight with a $335 PT, citing AWS's accelerating growth and profitability as the core driver, with retail signals building in grocery, robotics, and agentic commerce. UBS maintains Buy with a $305 PT, noting Amazon should still benefit from e-commerce margin expansion and Prime Video monetization, but does not assign a valuation premium given the heavier investment burden.

Risk Factors:

1. Sustained capex increases (projected $322B in 2027) could pressure free cash flow; if commercialization milestones are not consistently met, market tolerance for new spending may narrow.
2. Intensifying e-commerce competition from emerging platforms (Temu, Shein) and META's e-commerce ambitions could compress market share.
3. A deceleration in AWS growth or margin contraction could weigh on overall valuation.
4. Macroeconomic weakness could dampen e-commerce growth and advertising spending.

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