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LivestreamMenuWall Street – just like investors – loved Amazon’s earnings report, particularly its growth at cloud business Amazon Web Services. Shares of Amazon jumped 11% after the company reported a revenue beat in its second-quarter report . The hyperscaler also saw its cloud business grow 37% year over year, above estimates for 31%. AWS and Amazon’s advertising business’ revenues also both exceeded expectations. CEO Andy Jassy said in a press release that AWS growth is “booming,” and that the growth in the company’s cloud business was the fastest since 2021. AWS’ backlog reached $496 billion in the quarter. Analysts across Wall Street hiked price targets, and mostly maintained their buy ratings on the stock. “The market is rewarding evidence,” said Canaccord Genuity’s Maria Ripps in a note, “with AWS re-accelerating as margins expand, demand visibly outrunning capacity into 2027, and enterprise inference adoption still early.” AMZN YTD mountain Amazon year-to-date. Analyst Mark Shmulik at Bernstein said AWS has finally hit a growthinflection and now views the company at the top of the artificial intelligence cloud wars. Revenue guidance for the current quarter at Amazon came in slightly weaker-than-expected, at between $197 billion and $202 billion. Analysts polled by LSEG were expecting a forecast of $204.1 billion for the third quarter, and the company blamed the miss for the decision to move Amazon’s “Prime Day” event to June instead of July. Amazon’s capital expenditures in the quarter came in above estimates, according to StreetAccount, at $54.21 billion, up 68% year over year. Capital expenditures for 2026 are now projected to hit $220 billion, the company said. While other big technology companies have been victims of investors’ worries over fears capex is too high with little evidence of a return on investment, analysts on the Street said Amazon eased those fears through its commentary. “Management provided a much-needed framework on data center returns, with buildings having a 30yr life, server & networking assets having payback periods of less than 3yrs, and then strong returns over the remaining 3yr useful lives,” Bank of America analyst Justin Post wrote in a Friday note. Baird: Outperform, $300 “We reiterate our positive view with Q2 results demonstrating the strong acceleration in AWS as more capacity and new contracts contribute, while the e-commerce segment benefited from clear market share gains (e.g., 17% paid unit growth) and margins continuing to scale even excluding one-time benefits (tax refunds/energy derivative gain.).” UBS: Buy, $318 The bank’s price target, up from $305, indicates a 35% gain from Thursday’s close. “The updated disclosure of $25B in AI ARR for AWS alongside $496B in backlog – both suggest that demand from enterprises for Bedrock and core are both accelerating. We had anticipated the backlog to step up by $100B given the previously-announced Anthropic agreement, but it grew by an incremental $51B QOQ. This sets the stage for what should be ~39% YOY growth for AWS into 2H26 and what should be above 40% growth next year as OpenAI starts to use Trainium chips in early-2027.” Bank of America: Buy, $320 The bank’s price target, up from $310, represents a nearly 36% rise from Thursday’s close. “Amazon’s AI positioning has improved significantly in the past 12 months, with AI revenues growing to 15% of total Cloud revs., benefiting from rapid capacity additions, Trainium improvements, and accelerating Bedrock demand. While higher ’26 capex will pressure FCF (we est -$40bn in 2026), we believe Amazon is building an asset base that will have high returns, and that Amazon is well positioned to further benefit from the upcoming inference wave driven by agentic AI.” Bernstein: Outperform, $320 The bank’s price target is up from $315. “Management offered the cleanest commentary around returns against this capex which went up to $220B for 2026 with expectations of elevated spending into 2028. The current spending mix has a major portion allocated to Data Center build outs, and when built, the spend further shifts to servers with short pay-back periods.” Oppenheimer: Outperform, $320 “AWS margins were well ahead of expectations, +40bps q/q, ex. Derivative gain, challenging the bear case that AI revenue is lower margin, and reaching 15% of business. The $4.7B of sequential AWS growth dollars was the largest in history, in line with GCP and more than Azure.” Canaccord Genuity: Buy, $330 “Management also raised its FY26 CapEx outlook to approximately $220B (from ~$200B), a risk that has pressured other prints this earnings season, although the accompanying capital framework, in which server and networking spend is triggered only against visible demand, break-even arrives in under three years, and most AI capacity is contracted on at least five-year terms, provided a concrete basis for underwriting the higher spend.” RBC Capital Markets: Outperform, $330 The bank’s price target, up from $320, implies a 40% gain from Thursday’s close. “AMZN’s Q2 print was exactly what bulls wanted… Stepping back, AMZN was our favorite internet mega-cap idea starting out the year on AI infrastructure’s value capture looking more certain than models or intelligence while it had not yet shown a real inflection. The inflection may finally be arriving.” Morgan Stanley: Overweight, $335 “AWS’s $496bn backlog (up $132bn q/q) was 5%, or ~$20bn better than expected. This, in our view, continues to be an important indicator of durable multi-year growth to come at AWS.” Truist: Buy, $350 The bank’s price target, up from $320, represents a 48% gain from Thursday’s close. “Mgmt continues to earn the right to invest despite the negative NT FCF impact as these investments are becoming increasingly de-risked. AMZN is one of the best plays on the secular growth of AI/Cloud, eCom, and Ads, all at a compelling valuation.” Citi: Buy, $350 The bank’s price target is up from $325. “The challenge continues to be compute capacity, with management reaffirming its commitment to double capacity by ’27 and we once again raise our CapEx projections. Perhaps the biggest surprise this quarter—and there were many—was AWS’ margins expanding 520bps to 38.1% (ex-its energy contract benefit) on what we believe are structural benefits.” Barclays: Overweight, $365 The bank’s price target, up from $330, indicates a nearly 55% rise from Thursday’s close. “AWS is benefiting from scale, custom silicon, and software optimizations across the stack. We think these are durable advantages, and demand is clearly off the charts based on the $496B backlog (up $252B since beginning of 2026). At the same time, retail is offering a wider range of SKUs at lower prices and with faster delivery speeds, and hence is gaining share on its peers.” JPMorgan: Overweight, $365 The bank’s price target is up from $330. “Importantly, management emphasized that the ROIC on its AI investments is compelling and it has a clear line-of-sight to strong financial returns. In terms of the ROIC framework, it takes less than three years to breakeven on server and networking equipment investments, which have a useful life of at least 5-6 years, while data centers have 30+ year useful lives, enabling five to six generations of servers over time. We project AWS growth of +38% in 2026 and +33% in 2027, which could be conservative based on backlog.” Goldman Sachs: Buy, $375 The bank’s price target, up from $335, represents a 59% gain from Thursday’s close. “Over the next 12+ months, we reiterate our view that Amazon can produce a strong mix of compounded revenue growth and operating margin expansion on a multi-year horizon while continuing to make critical investments in long-term growth initiatives. We see AMZN as well positioned for future outperformance.”Read More
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