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Citi Reaffirms Amazon as Top Pick, Sees FTC Lawsuit as Buying Opportunity
Summary
Analysts at Citi maintained a Buy rating and a $350 price target on Amazon, advising investors to look past an FTC advertising lawsuit and focus on accelerating AI demand and retail market share gains.
Citi has designated Amazon.com, Inc. (NASDAQ:AMZN) as its top investment pick, arguing that any share price weakness resulting from a recent Federal Trade Commission (FTC) lawsuit represents a buying opportunity for investors.
Citi's Bullish Stance
The investment bank reaffirmed its Buy rating and $350 price target on the technology giant. In a note to clients, Citi analysts cited several key growth drivers underpinning their positive outlook, including accelerating demand for artificial intelligence, continued market share gains in retail, and expanding overall profitability.
Following the news of the FTC suit, shares of Amazon declined. However, Citi's position suggests that the long-term fundamentals of the business remain strong and outweigh the near-term legal headwinds.
Addressing the FTC Lawsuit
The endorsement comes as Amazon faces an FTC lawsuit targeting its advertising practices. According to Citi, Amazon has responded to the allegations with data indicating improved returns for its advertisers over the period in question.
AdKey points from Amazon's defense, as highlighted by the analysts, include:
- Inflation-adjusted Sponsored Products cost-per-clicks remained flat from 2019 to 2024.
- Advertiser conversion rates increased by more than 24% between 2021 and 2025.
- The company's ad platform allegedly saved advertisers $8 billion through investments in relevancy tools, delivering significantly higher sales and return on ad spend compared to alternative models.
Valuation and Growth Catalysts
Citi's $350 price target is based on a valuation of approximately 31.5 times its 2027 price-to-earnings (P/E) estimate of $11.06 per share. The bank noted this multiple sits at the lower end of Amazon’s historical trading range over the past decade.
The firm's analysts project accelerating Amazon Web Services (AWS) revenue growth in the second half of 2026, boosted by AI tailwinds. This is supported by a new partnership with NVIDIA to deploy more than 2 million GPUs in 2027-2028 and a collaboration with Cognition to deploy its AI engineer, Devin. Citi also pointed to retail business strength, with Agentic Commerce and Alexa Shopping expected to improve conversion rates.
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