Morgan Stanley raises Amazon target price, sees 40% upside on cloud growth, AI agents

Amazon stock could rise 40% thanks to growth in its cloud business, the spread of AI-powered shopping agents, and the use of robotics in logistics, Morgan Stanley said in an update on the retail giant. The bank raised its target price from $335 to $350 per share and named Amazon a top pick while maintaining its “overweight” rating. Following the upgrade, Amazon rose 5% on Monday to $262.60 per share, which brought its year-to-date gain to almost 14%.

Investors underappreciate the impact of Amazon Web Services (AWS), the company’s cloud division offering computing power and infrastructure on a pay-as-you-go basis, on Amazon’s business and stock, Morgan Stanley analyst Brian Nowak argues, according to CNBC. He expects AWS to sustain strong revenue growth through 2028, generating substantial profit, Barron’s writes. Bedrock, a service for building and scaling generative AI applications, could provide further support, Nowak believes. Morgan Stanley expects AWS revenue to grow 47% year over year in 2027, CNBC reports.

Meanwhile, Amazon’s infrastructure spending will remain high. Nowak estimates that the company’s capex could reach $355 billion in 2027 and $365 billion in 2028, partly reflecting additional chip purchases. Despite the scale of that investment, he remains confident in AWS’s growth and profit outlook, Barron’s reports.

Another potential catalyst is the rise of agentic commerce, in which AI agents help users choose products and make purchases. Nowak views Amazon as a key platform enabling this form of shopping and one of its main beneficiaries, able to monetize it through its leading e-commerce infrastructure and loyal customer base. That assessment remains unchanged even after Meta’s launch of its personal AI agent, Muse. In September, Amazon blocked Muse from its marketplace, citing shortcomings in bots’ performance and opposing automated purchases. If Muse’s holiday shopping offerings fail to generate successful sales without Amazon, that would provide further evidence of Amazon’s importance to scaling agentic commerce, Nowak argues.

Amazon could also become a leader in physical AI, or AI-powered robotics. The extent to which it expands its network of robotic fulfillment centers in 2027, through new facilities and retrofits of existing ones, could demonstrate that it is a winner in this area too, in Nowak's view.

The overwhelming majority of Wall Street analysts who cover Amazon remain upbeat on the stock. According to MarketWatch data, 69 of the 71 analysts rate it a "buy." The remaining two have “hold” ratings.