Amazon.com Inc. (AMZN) stock rose nearly 1% during Friday's premarket session as broader market sentiment improved. Nasdaq futures gained 0.72%, while S&P 500 futures climbed 0.37%, signaling stronger investor appetite for risk.

The gains come as the company expands across e-commerce, cloud computing, and artificial intelligence. Investors are also weighing which businesses could drive its next phase of earnings growth.

Analyst Sees Amazon Stock As Undervalued

Needham analyst Laura Martin sees Amazon stock as undervalued, citing its customer ecosystem, growing AI adoption and higher-margin cloud operations.

Martin told CNBC on Thursday that only about 20% of Amazon's traffic is exposed to outside AI-driven commerce tools because most shoppers go directly to Amazon's website or app.

She also said 67% of Amazon users now use AI when searching for products on the platform.

AI Infrastructure Gives Amazon a Competitive Edge

Martin believes generative AI will favor the largest technology companies because they have stronger infrastructure, deeper technology resources and greater control over their ecosystems.

Martin contrasted Amazon with Alphabet Inc. (GOOG) (GOOGL) Google and Meta Platforms Inc. (META), saying those companies historically operated with lighter capital requirements but are now spending more heavily on infrastructure.

Amazon, by comparison, has long invested heavily in physical assets and data centers, which Martin views as a core strength.

She said that experience could help Amazon as AI demand increases and large technology companies spend more on computing capacity.

Cloud Growth and Higher Margins Drive Earnings Potential

Martin said Amazon has effectively become a cloud company, with its cloud business growing 40% at roughly 35% margins.

By contrast, she said e-commerce operates at about 1% margins and requires heavy investment, even though it helps fund Amazon's broader operations.

Martin said Amazon can turn physical infrastructure into much higher-margin cloud revenue, improving its earnings power compared with the lower-margin retail business.

The stock carries a consensus Buy rating, with an average analyst price forecast of $335 across 50 analysts. Forecasts range from $250 to $400. Recent analyst actions include:

• Tigress Financial: Raised its price forecast to $385 from a previous level on Oct. 6, maintaining a Buy rating.
• TD Cowen: Maintained its Buy rating and $350 price forecast on Oct. 5.
• Rosenblatt: Raised its price forecast to $360 on Sept. 30, maintaining a Buy rating.

AMZN Price Action: Amazon.com shares were up 0.77% at $256.00 during premarket trading on Friday, according to market data.