Amazon (NASDAQ: AMZN) stock is gaining ground in Tuesday's trading. The company's share price was up 2.7% as of 3 p.m. ET. Meanwhile, the S&P 500 index was up 0.4%, and the Nasdaq Composite index was up 0.5%

Amazon is climbing today thanks to bullish coverage on the stock published by Redburn Atlantic. The firm maintained a buy rating on Amazon and raised its one-year price target on the stock from $225 per share to $235 per share. As of this writing, the new price target suggests additional potential upside of roughly 14%.

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Redburn believes AI will power more wins for AWS

Redburn's analysts cited Amazon's strong market positioning and competitive moats as reasons for raising their price target on the stock. The tech giant has the benefit of an encompassing artificial intelligence (AI) ecosystem. Amazon Web Services (AWS) continues to lead the cloud-infrastructure market and is a go-to destination for building, deploying, and scaling AI applications. Redburn's analysts believe that Amazon's strong networking foundations and emerging AI accelerators will continue to drive wins for AWS.

What's next for Amazon in AI?

While e-commerce accounts for the majority of Amazon's revenue, AWS actually accounts for most of the company's profits. With AI driving demand for the company's cloud infrastructure services, AWS looks poised to contribute a larger share of the company's overall revenue. In turn, the tech giant's profit margins should continue rising over the long term.

But while AI will have the biggest impact on the cloud business in the near term, it could have a transformative impact on the e-commerce business over the long term. Online retail remains a relatively low-margin business due to high shipping and warehousing costs, but advancements in AI and robotics could lead to automation advancements and significantly lower operating costs. If so, Amazon's profits are set to soar over the long term.

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