TD Cowen reiterates Amazon stock Buy rating, $265 target

On Friday, TD Cowen maintained a positive outlook on Amazon.com (NASDAQ:AMZN) shares, reiterating a Buy rating and a $265.00 price target, aligning with the broader analyst consensus of Strong Buy. Currently trading at $222.88, Amazon boasts a substantial market capitalization of $2.36 trillion, making it a prominent player in the Broadline Retail industry. According to InvestingPro data, the company’s overall financial health score is rated as GOOD, with particularly strong metrics in profitability and growth. The firm’s analysts provided a detailed analysis of Amazon’s return on investment (ROI) as the tech giant continues to expand its Amazon Web Services (AWS) infrastructure, specifically focusing on its generation of artificial intelligence (GenAI) revenue and related capital expenditures (capex).

According to TD Cowen, AWS is expected to generate approximately four times the incremental GenAI revenue to incremental GenAI capex on average from 2026 to 2030, compared to the same ratio from 2013 to 2022, prior to the GenAI era. This projection is based on the anticipation that revenue will increase and the historic growth in capex spending will start to level off beginning in 2026. This growth trajectory builds upon Amazon’s current strong performance, with InvestingPro reporting an impressive revenue growth of 11% in the last twelve months, generating total revenue of $638 billion and EBITDA of $120.47 billion.

The analysts unveiled proprietary profit and loss statements (P&Ls) for Anthropic, estimating that around 50% of AWS’s GenAI revenue in 2024 was derived from Anthropic’s contributions. Furthermore, a new proprietary model for AWS’s property, plant, and equipment (PP&E) has led to higher depreciation and amortization estimates for AWS, which are well above the consensus.

In terms of revenue forecasts, TD Cowen estimates AWS’s GenAI revenue to be approximately $2.8 billion in 2024, with a significant rise to $7.1 billion in 2025 and reaching $56.3 billion by 2030. This would represent a compound annual growth rate (CAGR) of 51% from 2025 to 2030. GenAI revenue is projected to account for 2.4% of Amazon’s total revenue in 2024, increasing to 17.4% by 2030. Additionally, GenAI revenue is expected to contribute 3.3% to AWS’s annual growth from 2024 to 2030.

The analysts also forecast that AWS’s capex will surge to about $76 billion in 2025, marking a year-over-year increase of roughly 43%. This follows a doubling of capex in 2024, as the majority of AWS’s incremental capex is allocated towards building its GenAI infrastructure. This is especially pertinent given the demand for AI, which exceeded AWS’s capacity in the fourth quarter of 2024. The significant rise in capex since 2023 has resulted in a capex to sales ratio of 59% in 2025, a considerable jump from the 36% ratio observed from 2014 to 2023. For investors seeking deeper insights into Amazon’s AI initiatives and financial metrics, InvestingPro offers comprehensive analysis through its Pro Research Report, part of its coverage of over 1,400 US stocks, providing detailed valuation metrics and growth projections that help decode complex investment opportunities in the AI space.

In other recent news, Amazon MGM Studios announced a joint venture with Michael G. Wilson and Barbara Broccoli to manage the intellectual property rights of the James Bond franchise, giving Amazon MGM Studios creative control over future productions. This development follows Amazon’s acquisition of MGM in 2022, which included the distribution rights for all James Bond films. In another collaboration, STMicroelectronics is working with Amazon’s AWS on a new AI chip designed for data centers, aiming to improve speed and reduce power consumption in transceivers. This chip is part of STMicroelectronics’ efforts to tap into the growing AI infrastructure market, with AWS planning to implement the technology once production begins.

Amazon Prime Video has launched FanDuel Sports Network as a subscription add-on, expanding access to local sports content for $19.99 per month. This move aims to enhance the availability of FanDuel Sports Network across various platforms, including cable and satellite. Meanwhile, Figure AI is reportedly in discussions to secure $1.5 billion in funding, potentially valuing the company at $39.5 billion, driven by advances in humanoid robot technology. Lastly, New Street Research has increased Amazon’s stock target to $280, highlighting the anticipated growth of Amazon Web Services (AWS) as a significant contributor to Amazon’s future financial performance. The firm maintains its Buy rating, citing potential catalysts such as broader AWS engagements in artificial intelligence and improvements in AI applications.

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