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Investing.com -- Morgan Stanley (NYSE:MS) has raised its price target on Amazon (NASDAQ:AMZN) shares by 20% to $300, implying around 35% upside from current levels, as the Wall Street bank sees a more favorable macro environment and growing momentum in Amazon Web Services (AWS).
The firm also reiterated Amazon as its top pick and lifted its 2026/2027 earnings per share (EPS) forecasts by 9% and 6%, respectively.
A key driver behind the upgrade is what Morgan Stanley described as a “more manageable tariff and geopolitical backdrop,” prompting the bank to reverse prior EPS cuts tied to a 145% China tariff scenario.
The revised estimate restores Amazon’s 2026 EPS target to $8, in line with earlier projections before those risks were priced in.
Morgan Stanley is also more confident in an acceleration of AWS growth, highlighting four specific reasons why the cloud computing platform is likely to accelerate.
First, the analysts expect a larger contribution from AI startup Anthropic, in which Amazon holds a stake. They project Anthropic to reach around $10 and $19 billion of revenue in 2026 and 2027, respectively.
“If we assume the company is operating at 60% gross margins (ex-support costs), and 75% of these costs of goods sold (COGS) are flowing through AWS, this implies Anthropic’s contribution to AWS is likely to expand to ~150bp+,” analysts led by Brian Nowak said.
Second, they highlight the resilience of AWS’s core business even without Anthropic, which has maintained healthy growth through supply constraints.
Third, the strength seen in Microsoft Azure’s non-GenAI workloads may signal broader enterprise cloud spend, potentially benefiting AWS.
And finally, recent CIO survey data point to Amazon tactically gaining share from Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), and Oracle (NYSE:ORCL) in cloud budgets.
Morgan Stanley now expects AWS revenue to grow 17%–18% annually through 2026, with stable margins near 37% and a bottom-up profit model supporting the outlook.
“This speaks to the significant upside to AMZN if the company can execute/gain share in E-commerce profitably through this uncertain period and AWS reaccelerates over the course of 2H:25 to durable highteens-to-20% growth,” analysts wrote.
The updated $300 price target is based on applying a ~35x multiple to the average of the new $8/$9 EPS estimates for 2026/2027, with the bull-case scenario set at $350, or roughly 60% upside.
Morgan Stanley continues to model Amazon as capturing around half of every incremental dollar of U.S. e-commerce spend.