Amazon.com Inc (NASDAQ:AMZN) shares were trading higher on Wednesday after JPMorgan reiterated its Overweight rating and $265 price target, maintaining the stock as its "Best Idea."
AMZN shares are advancing steadily. Check the full analysis here.
What To Know: The move comes as analysts led by Doug Anmuth pointed to one of Amazon's most significant grocery expansions to date, which they believe will strengthen demand, increase market share and enhance Prime pricing power.
The analysts noted that Amazon is rolling out thousands of fresh perishable grocery items across its retail network, with Same-Day delivery coverage expected to more than double to over 2,300 U.S. cities and towns by year-end, up from just over 1,000 currently. This expansion will be free for Prime members with orders of $25 or more, carry a $2.99 fee for smaller Prime orders, and cost $12.99 per order for non-members. The company plans to add even more communities in 2026. This grocery push builds on Amazon's earlier announcements to expand same-day and one-day delivery to over 4,000 U.S. cities and towns by the end of 2025 and invest $4 billion to triple its rural delivery network by 2026, reaching more than 13,000 zip codes.
Anmuth said that grocery is the largest U.S. retail vertical, representing about 43% of adjusted retail sales, but only around 15% penetrated online. The analysts noted that Amazon's deeper move into grocery should drive higher purchase frequency and greater share of wallet, while also fueling advertising growth. They highlighted that Amazon is not expected to face major margin headwinds from the expansion, given ongoing cost reductions through regionalized inventory placement, new same-day facilities, and increased automation.
JPMorgan also pointed to strong performance in Amazon's grocery-related businesses, with average monthly customer spend at Amazon Fresh stores rising more than 20% since store redesigns, and Whole Foods sales up over 40% since its 2017 acquisition.
Anmuth and his team believe the expansion, combined with Amazon's low prices, wide selection and fast delivery, will help the company maintain its e-commerce edge against competitors like Walmart and other marketplaces. They added that with rising customer value, Amazon could increase the price of Prime in 2026, continuing its pattern of periodic subscription hikes.
The firm's $265 target price is based on roughly 29 times projected 2027 GAAP EPS of $9.12, and the analysts reiterated their view that Amazon is well-positioned for growth across e-commerce, grocery, and advertising in the years ahead.
AMZN Price Action: Amazon shares closed up 1.39% at $224.54 at publication on Wednesday, according to Benzinga Pro.
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