Amazon shares have received a fresh boost from bullish brokerage calls ahead of the company’s September-quarter results, with Morgan Stanley naming the e-commerce and cloud computing giant its top pick and UBS raising its price target, citing the potential for stronger profitability at Amazon Web Services (AWS).
Morgan Stanley raised its price target to $350 from $335, reiterating its ‘Overweight’ rating, while UBS lifted its target to $348 from $318 and maintained its ‘Buy’ rating. Both brokerages see scope for further gains, driven largely by accelerating cloud growth, artificial intelligence (AI) opportunities, and improving operating efficiency.
However, the optimistic outlook comes as Amazon prepares to significantly increase its capital expenditure to build AI infrastructure, raising questions about how quickly the investments will translate into stronger earnings and cash flow.
Morgan Stanley analyst Brian Nowak identified five potential growth drivers, with faster AWS growth and expanding margins at the center of the bullish outlook.
The brokerage expects AWS revenue to grow 47% in 2027 and 42% in 2028, up from its earlier projections of 41% and 37%, respectively. The revised estimates follow Nvidia’s disclosure that AWS is expected to purchase and deploy around two million of its graphics processing units over the two years.