Amazon (NASDAQ:AMZN) The stock ended last week with a bang, driven by strong Q3 results. The company beat expectations on both top and bottom lines, and while its fourth-quarter revenue forecast came in just below consensus, investors ignored that miss and focused on one bright spot: its operating income forecast beat the Street's estimate by some 4%, with margins up about 40 basis points.

JMP's Nicholas Jones, an analyst ranked in the top 2% of Wall Street stock professionals, saw a lot to be bullish about while flipping through the paper and believes the stock has even stronger days ahead.

“Overall,” said the 5-star analyst, “we view AMZN's results and guidance positively and continue to believe that AMZN is the stock to watch in the e-market due to its wide selection of non-discretionary items and its large and growing advertising. Commerce should own business and AWS’s exposure to AI.”

For the analyst, Amazon complies with all rights notices in the various business areas. Although management noted that customers remain mindful of their spending, the company is seeing “favorable trends” in everyday essentials in the retail segment, with customers making larger purchases and shopping more frequently. Looking ahead, the company plans to focus on “increasing efficiency” in its retail operations by improving delivery speeds, reducing service costs and improving packaging processes. Management also sees additional opportunities to leverage robotics and automation to further strengthen its fulfillment network.

Meanwhile, AI demand continues to drive “strong AWS trends,” with AI accounting for billions of dollars in annual revenue and “growing at triple digits.” In the last 18 months, Amazon has launched nearly twice as many machine learning and GenAI features as all other major cloud providers combined.

Additionally, continued expansion of AI at AWS is expected to “lead to operating margin improvement” over time. As Microsoft also noted for its cloud business, demand for AWS is outstripping supply, with the company anticipating that increasing capacity could lead to accelerated growth, although chips “remain a bottleneck.”

In summary, Jones said, “We continue to like AMZN's stable performance across all business lines, commitment to generative AI spending and continued strong performance in the advertising business.”

In fact, Jones believes he has raised his price target from $265 previously to a Street high of $285, suggesting Amazon shares will gain about 46% over the next 12 months. Needless to say, Jones' rating remains Outperform (i.e. Buy). (To view Jones' track record, click here)

Jones is not alone in his optimism. Wall Street analysts overwhelmingly support the stock, with 45 “Buys” versus just one “Hold,” giving AMZN a “Strong Buy” consensus rating. The average price target is $236.20 and offers a one-year return of ~21%. (See AMZN stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is for informational purposes only. It is very important to do your own analysis before investing.