Amazon (AMZN) stock rose more than 3% in early trading Monday after Morgan Stanley named it its top pick and raised its price target to $350 from $335, outlining five catalysts that could send the stock higher.
The new target implies an upside of around 40% from Friday’s close of $250. With a bear case of $220 per share and a bull case of $410, the company projects a risk-reward ratio of 3:1.
262.56 +12.56 (+5.02%)
At 11:31:05 a.m. EDT. Open market.
“In a market where AI leaders and laggards oscillate, we detail five upcoming catalysts to rerate stocks and drive significant outperformance,” analyst Brian Nowak, who retained his overweight rating, wrote in a note Sunday.
5 catalysts for Amazon
Faster AWS Growth: Morgan Stanley now expects revenue at AWS, Amazon’s cloud unit, to grow 47% in 2027 and 42% in 2028, up from 41% and 37%. The move follows Nvidia’s (NVDA) revelation that it expects AWS to purchase and deploy approximately 2 million of its GPUs over the course of two years. The additional chips also raise the company’s capital spending forecast for Amazon to $355 billion in 2027 and $365 billion in 2028.
Greater AWS benefits: Nowak expects AWS operating margins of 42% in 2027 and 44% in 2028, supporting approximately $16.50 in earnings per Amazon share in 2028.
Base: Greater visibility into Bedrock, Amazon’s AI modeling service, could boost the stock’s valuation to about 15 times 2028 earnings, the note said.
AI purchasing: Nowak expects Amazon to become a winner as AI sales agents become more widespread and expects it to partner with Meta’s (META) Muse AI agent over time. The holiday season is the first big test.
Robotics: Every 10% of Amazon’s global units passing through its robotic fulfillment centers could save between $2 billion and $4 billion per year, Morgan Stanley estimates. The company sees robotics as a catalyst for 2027.
Amazon stock is up about 11% this year, but is about 10% below its peak in early August. Earlier this month, Yahoo Finance’s Brian Sozzi noted that Amazon was trading at one of its lowest price-to-earnings ratios in years. Morgan Stanley’s $350 target is based on roughly 21 times its 2028 earnings estimate.
Amazon will report its third-quarter results on October 29 after the bell.
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