01:32 PM EDT, 07/30/2024 (MT Newswires) -- Amazon.com ( AMZN ) is expected to enter a new investment cycle, highlighted by significant capital expenditure for Amazon Web Services, grocery initiatives and Project Kuiper that "will be more meaningful over time," UBS said in an earnings preview on Tuesday.

"While we do not expect more specific quantification of all of these initiatives, we do expect greater focus this quarter on the aggregate CapEx amount as it should provide a read-through to potential upside for AWS revenue growth," UBS added.

UBS said Q2 investor and Street expectations for Amazon's ( AMZN ) revenue and operating income are at the top end of the company's outlook ranges of $144 billion to $149 billion and $10 billion to $14 billion, respectively.

The investment firm said the bull thesis for Amazon ( AMZN ) centers on faster gross merchandise value growth and market share gains through enhanced service levels, especially the expansion of one and same-day Prime delivery.

Additionally, margin expansion in e-commerce due to improved unit economics and the potential of Prime Video with ads as a high-margin revenue stream support the positive outlook, UBS said.

UBS increased the price target on Amazon's ( AMZN ) stock to $224 from $217 and reiterated its buy rating.

Amazon ( AMZN ) will release its Q2 earnings results on Thursday.

Shares of Amazon ( AMZN ) were down 1.7% in recent trading.

Price: 180.02, Change: -3.18, Percent Change: -1.74