Quick Read
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AWS growth of 39%, its fastest in nearly five years, backs a $325 price target implying 25% upside for Amazon stock.
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Amazon’s $220 billion capex bill pushed free cash flow negative, yet AWS posted a 38.7% operating margin, suggesting the spending pays off.
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Microsoft trades at 30x earnings against Amazon’s 36x, while Alphabet’s 13x P/E is flattered by a one-time equity gain.
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The 24/7 Wall St. price target for Amazon (NASDAQ:AMZN) is $324.74. The stock has 24.8% upside from the close of $260.21, and our model rates it a buy with high confidence.
AWS is the main driver. Revenue grew 39% in the third quarter, the fastest rate in nearly five years.
Management expects growth north of 40% in each of 2027 and 2028, and the backlog stands at $578 billion. Our 70% confidence reflects near-unanimous analyst support, weighed against a spending cycle that has pushed free cash flow negative.
AWS Acceleration Sparks an 8% Weekly Rally
Shares traded near $263.66. They are up 8.15% over the past week, 2.88% over the past month and 14.23% year to date. The price sits 8.2% below the 52-week high of $287.20 and 34.5% above the low of $196.
Third-quarter revenue rose 12.1% to $201.94 billion, just missing the $202.20 billion estimate. GAAP EPS of $1.89 also missed the $1.96 estimate, although last year’s quarter included a $9.5 billion pre-tax gain on Amazon’s Anthropic stake. Operating income rose 61.2% to $28.08 billion, and the 13.9% operating margin was the highest in the company’s history.
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