After a big pullback in technology shares Friday caused the Nasdaq composite to post its worst week of the year, some investors are worried it may be a sign a bubble in the sector's valuations is finally bursting.
The five biggest technology stocks lost nearly $100 billion in market value Friday with Amazon shares falling 3 percent. Technology and online stocks dropped again Monday with Amazon down more than 2.8 percent.
But Piper Jaffray still believes a big Amazon rally is ahead.
The firm raised its 12-month price target for Amazon, citing the company's web search analysis which pointed to strong June quarter sales growth for the e-commerce giant.
"We continue to believe that Amazon is the best positioned large cap internet platform for the next 5+ years and are raising our price target," analyst Michael Olson wrote in a note to clients Monday. "Proprietary analysis of Google search trends from our PJC Data Analytics platform indicates Amazon retail growth will likely see little to no deceleration in Q2'17."
Olson reiterated his overweight rating on Amazon and raised his 12-month price target to $1,200 from $1,050, representing 23 percent upside from Friday's close.
The analyst said the firm's web analysis revealed search interest for Amazon-related words grew 23 percent year over year in the June quarter to date matching the 23 percent growth in the March quarter. He cited how Piper's search analysis had a 95 percent correlation with Amazon's retail sales unit growth in the previous 37 quarters.
Amazon shares have rallied 30.5 percent this year through Friday, compared with the S&P 500's 8.6 percent return in that period.
Piper's price target raise for Amazon comes less than a week after small firm Maxim Group raised its price target to $1,300 on Tuesday, the highest among analyst firms.