Top E-Commerce Stock Pick from BMO Capital Markets

BMO Capital Markets has identified its top pick in the E-Commerce & Marketplaces sector, highlighting a company that delivered mixed third-quarter results but demonstrated strong momentum in its cloud computing and artificial intelligence businesses.

The investment firm maintains an Outperform rating on its leading choice while raising the price target, citing accelerating growth in key high-margin segments despite some near-term headwinds in retail and advertising operations.

Amazon (AMZN)

BMO Capital Markets reiterated its Outperform rating and raised the target price to $390 from $380 maintaining the e-commerce giant as the "Top Pick."

The company delivered mixed third-quarter 2026 results, with net sales meeting expectations while operating income beat by 7%. AWS revenue reached $46 billion, up 39% year-over-year, marking the fastest growth in 19 quarters and exceeding Street estimates by 1 percentage point. The cloud division's annual recurring revenue reached $184 billion, supported by a $578 billion backlog growing at a triple-digit rate. Management projected AWS growth above 40% in 2027 and 2028, with potential to reach $1 trillion in revenue within 5-10 years. AI-related revenue grew triple-digit year-over-year, with Bedrock token volume increasing nearly 17 times.

However, advertising growth decelerated materially to 12% year-over-year excluding foreign exchange effects, missing consensus by 6 percentage points due to a Prime Day calendar shift. Retail operations also slowed, with Online Stores up 2% year-over-year excluding foreign exchange, Physical Stores up 2%, and third-party Seller Services up 10%. The company achieved a record consolidated operating margin of 13.9%. Capital expenditures reached $76 billion in the third quarter, primarily for AWS and AI infrastructure, with total 2026 spending expected around $220 billion.

BMO increased 2026/2027 net sales estimates to $831 billion/$974 billion and raised 2027/2028 capital expenditure estimates to $320 billion/$335 billion.