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Investing.com -- Wells Fargo has upgraded Amazon shares to Overweight from Equal Weight in a note on Wednesday, citing stronger conviction in revenue acceleration at Amazon Web Services. The bank lifted its price target for the stock to $280 from $245.
The analysts said they see “AWS revenue acceleration as the key to the reversal of share underperformance YTD,” noting Amazon shares have been flat compared with a 17 percent rise in the Nasdaq.
Wells Fargo raised its 2026 AWS growth forecast to 22 percent, up from 19 percent previously, and four points above consensus. The upgrade is said to be driven by Project Rainier, a large-scale compute capacity build with Anthropic.
“We see Project Rainier, a significant compute capacity build w/ partner Anthropic, as the primary driver of acceleration, contributing 5%/4% to AWS growth in ‘26/’27,” Wells Fargo wrote.
The bank said that Phase 1, totaling 1.3 gigawatts, is expected to come online in January 2026, followed by a ramp-up and Phase 2 later that year. They added that at full capacity, the Indiana campus could add about $14 billion annually to AWS revenues.
Wells Fargo forecasts that Anthropic alone will add seven points to AWS revenue growth in 2026, compared with three points in 2025. It also expects AWS market share losses to peak in 2025, with “modest” improvements from 2026 onward.
The bank acknowledged risks, including execution challenges around Project Rainier, potential issues with Amazon’s Trainium chips, and possible margin pressure from scaling AI workloads.
It assumes AWS operating income margin compression of 270 basis points in 2026 and 180 basis points in 2027.
Despite these risks, Wells Fargo raised its earnings estimates for 2026-28, projecting $11.52 EPS by 2028, and concluded: “We upgrade shares of AMZN to Overweight … based on 30x our 2027 EPS estimate of $9.33.”