Citibank's research report pointed out that from Amazon's (AMZN.US) third quarter performance, the company is more confident in achieving significant gross margin expansion while investing in growth. The bank emphasized that the improvement in retail efficiency has reduced Amazon's service costs, accelerating delivery speed, increasing conversion rates, and increasing overall consumer market share under lower average selling prices and essential goods.

Citibank expects Amazon to face multiple growth catalysts. The bank stated that in terms of AWS, revenue from Generative AI (GenAI) is growing at a triple-digit rate annually, with Annual Recurring Revenue (ARR) reaching billions of dollars, which should bring stable growth and profit margins with the rise of new instances and demand. The bank pointed out that despite the current focus on Amazon's capital expenditure and the recently postponed Project Kuiper to early 2025, it is expected to achieve greater overall growth and gross margin expansion in the future. The bank stated that Amazon is still its top choice in the internet industry, reiterating a 'buy' rating and raising the target price from $245 to $252.

Considering its third-quarter performance beating expectations, as well as fourth-quarter guidance, the bank roughly maintains its revenue forecasts, with operating profit forecasts for the next two years being increased by about 4% and about 1% respectively.