Goldman Sachs anticipates a relief escalation, rather than a risk escalation in October

Goldman has a $375 price target on Amazon.

It's the fifth-largest company in America by market capitalization and 95% of Wall Street analysts have a buy on it already, but Amazon's stock fortunes received an additional boost from Goldman Sachs on Thursday.

Amazon was added to Goldman's conviction list of most-preferred stocks, with analysts pointing out their 12-month target price of $375 indicates 50% more upside for those shares.

The latest shuffle of the deck in the favorite names of Goldman analysts also saw Burlington Stores $(BURL)$, Huntington Ingalls $(HII)$, Johnson Controls $(JCI)$ and Occidental Petroleum $(OXY)$ included at the expense of Tyson Foods $(TSN)$, ConocoPhillips (COP), Air Products and Chemicals $(APD)$, Golar LNG $(GLNG)$ and Loar Holdings $(LOAR)$.

Conviction List - Directors' Cut October Update

Studying the conviction list compiled by research director Steven Kron and colleagues, the names where Goldman's earnings forecasts are much higher than consensus are Huntington Ingalls (11% above), TPG Inc (TPG) (10%), Delta Air Lines $(DAL)$ (9%) and Amazon (AMZN) (8%). Its most contrarian bets are in Occidental Petroleum, Estee Lauder (EL) and UPS (UPS), where less than half of Wall Street is recommending a buy.

Goldman's Amazon analyst, Eric Sheridan, is bullish on the AI revolution's need for Amazon compute power as well as the company's operating leverage and its embryonic advertising platform.

In premarket trading Thursday, Amazon shares were 0.71% higher at $250.92.

Huntington's exposure to U.S. defense spending on shipbuilding forms a large part of its appeal to analyst Noah Poponak. Occidental's implementation of advanced recovery techniques is enhancing the longevity of its shale oil reserves according to Neil Mehta, who in a separate note upgraded the stock to buy from neutral.

Taking the overall market backdrop into consideration, analysts Dominic Wilson and Kamakshya Trivedi weighed in on the three big drivers at present: rates, energy and AI. The risks associated with these themes are "well-priced" now, they argue and so they anticipate "more risk relief than risk anticipation in the month ahead."

The meaningful backup in bond yields to multi-decade highs suggests to Goldman's economists that the ultra-low rates of the era after the global financial crisis are now past.

While the markets are still undecided about the short-term prospects for the AI trade, Goldman is more emphatic when it comes to energy. Analyst Yulia Grigsby now reckons oil shipments through Hormuz are back to pre-war levels. To her, this suggests a pivot back to normal.

-Jules Rimmer