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Investing.com -- JPMorgan is bullish on Amazon saying the pullback in shares post earnings overlooked strongest AWS quarter in nearly three years and gives a clearer roadmap for its AI infrastructure strategy.
Amazon shares have fallen about 10% from November highs despite third quarter results that showed AWS delivering its fastest growth in 11 quarters.
The shares were dragged down by market noise around Amazon’s $15 billion debt raise, competitive headlines tied to Anthropic’s work with Nvidia and Microsoft, and uncertainty over the launch timing of Amazon’s next generation Trainium chip.
Analysts at JPM expects next week’s AWS re Invent conference to ease those concerns. It said Amazon is likely to provide detail across Trainium timing and performance, updates on its expanded partnership with Anthropic, progress on its infrastructure buildout and further clarity on its AI software stack, including Bedrock, SageMaker and AgentCore.
JPMorgan said AWS demand indicators remain strong. Backlog rose 22% from a year ago to $200 billion in the third quarter, and Amazon added more backlog in October than in the entire quarter.
AWS growth is expected to accelerate in 2026, estimating a roughly 23% which JPM said could prove conservative. It projects AWS will show stronger quarterly and annual revenue growth than Microsoft Azure beginning in early 2026.
The firm highlighted several catalysts. Trainium 2 revenue grew 150% from the previous quarter and is now a multibillion dollar business. Amazon expects to preview Trainium 3 late next year, with larger volumes coming online in early 2026.
The size of Project Rainier for Anthropic is set to double to more than one million Trainium 2 chips by year end, which JPMorgan estimates could drive about $9 billion in annualized AWS revenue in 2026.
The bank also pointed to Amazon’s seven year, $38 billion agreement with OpenAI to run workloads on AWS, which includes access to large clusters of Nvidia GPUs.
JPMorgan kept Amazon as its top pick, followed by Alphabet. It set a December 2026 price target of $305, based on 33 times its 2027 earnings estimate and about 43 times projected free cash flow.