Piper Jaffray Sees Strong Growth in Amazon’s Advertising Profits

Amazon.com Inc. (NASDAQ: AMZN) shares rose on Monday after a new report from Piper Jaffray showed that Amazon’s advertising income will surpass its cloud computing profits with three years.

According to CNBC, Piper Jaffray analyst Michael Olson expected that Amazon’s advertising business income to reach USD 16 Billion in 2021, compared to USD 15 Billion from Amazon Web Service in 2021. He believed Amazon advertising business will become a major revenue driver for the Company and play an important role in its stock valuation in the coming years.

"While the Street has been focusing on the trajectory of core retail, growth of AWS, and new categories such as grocery & pharma, Amazon's advertising business has been quietly growing into a massive driver of current and future profitability," analyst Michael Olson said in a note to clients Monday, according to CNBC.

Olson reiterated his “overweight” rating on Amazon’s stock and its USD 2,100 price target for the shares.

Amazon shares rose 0.92% to USD 1,903.5 per share in the early trading on Monday. The stock hit an all-time high of USD 1925 during the trading session. It was up over 60% this year.

"Advertising will be a driver to watch, as the retail industry continues to live or die by the shift to direct-to-consumer & digital channels and real estate on Amazon, more than any other digital company, may have a direct line of sight on the multi-billion dollar 'trade promotion / merchandising' budgets of many marketers." Olson said, according to CNBC.

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