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Investing.com -- Wells Fargo raised its cloud revenue forecasts and upgraded Amazon to Overweight, flagging stronger-than-expected demand from major AI customers and new capacity projects that will benefit the largest providers.
Analysts led by Ken Gawrelski said the recent wave of compute contracts, including nearly $320 billion tied to OpenAI, shows “the cloud market opportunity [is] much larger than forecast.”
They now project the industry will expand to $873 billion by 2029, up from $230 billion in 2024, representing a 31% compound annual growth rate (CAGR).
While Oracle and new entrants such as CoreWeave (NASDAQ:CRWV) are expected to gain share, analysts argued that the overall market expansion leaves more revenue for incumbents. Wells Fargo estimates Oracle’s share could rise to 15% by 2029 from 4% in 2024.”
The bank’s upgrade of Amazon comes as Amazon Web Services’ (AWS) share losses are seen peaking in 2025 before stabilizing, aided by Project Rainier, a new data center campus for Anthropic in Indiana.
Phase one is set to come online in January 2026 and could contribute about $14 billion in annual AWS revenue at full capacity.
Wells Fargo lifted its 2026 AWS revenue growth estimate to 22% year-on-year, compared with consensus of 18%. It also raised its price target on Amazon to $280 from $245.
Google Cloud was also highlighted for showing momentum, supported by growing TPU adoption and its Gemini AI platform.
Wells Fargo raised its 2027 and 2028 GCP revenue estimates by 3% and 6%, respectively. The analysts said that “Gemini’s success, recently topping iOS app store rankings, serves as a strong reference point for TPUs”.
For Microsoft (NASDAQ:MSFT), the team cited large third-party compute deals worth more than $25 billion as evidence of persistent demand and supply shortages.
They raised 2026 and 2027 Azure revenue forecasts by 1% and 3%, highlighting new capacity from partners such as Nebius and Nscale beginning in late 2025.
Overall, while competitive shifts remain important, “stronger cloud market growth will result in more revenue dollars for all participants,” the analysts said.