Morgan Stanley Sees 33% Upside for Amazon on AI Cloud Growth
Morgan Stanley analyst Brian Nowak raised the price target for Amazon.com Inc. (AMZN) to $350, representing more than 33% upside from the stock's current level. The bullish note was released recently as the company's shares have trailed the S&P 500 over the past six months amid investor concerns over high artificial intelligence spending. Amazon stated it will spend $220 billion on capital expenditures this year, primarily for AI infrastructure. Nowak argues that this spending is justified by long-term opportunities in AI chips and cloud computing.
Morgan Stanley analyst Brian Nowak raised the price target for Amazon.com Inc. (AMZN) to $350, representing more than 33% upside from the stock's current level. The bullish note was released recently as the company's shares have trailed the S&P 500 over the past six months amid investor concerns over high artificial intelligence spending. Amazon stated it will spend $220 billion on capital expenditures this year, primarily for AI infrastructure. Nowak argues that this spending is justified by long-term opportunities in AI chips and cloud computing.
Amazon Web Services (AWS) holds a 28% market share in cloud computing, according to Synergy Research Group. The business reported a 37% increase in sales during the second quarter of 2026, achieving an annualized revenue of $169 billion. AWS generated $16.6 billion in operating income during that period, reflecting operating margins of 39%. Goldman Sachs estimates the global AI cloud market will reach $2 trillion by 2030 as tech companies increase capacity investments.
Amazon CEO Andy Jassy previously believed AWS could be worth $300 billion in a decade. With the recent surge in AI cloud demand, Jassy now projects that AWS' annualized revenue run rate could double that figure to $600 billion by 2036. This growth potential aims to offset the impact of current capital expenditures on investor sentiment. Amazon's leadership indicated on the second-quarter earnings call that revenue from its custom Trainium AI processor grew to an annualized run rate of $25 billion. Custom processors are designed to run AI models more efficiently than general-purpose GPUs, and companies are purchasing them to gain competitive advantages in the AI market.
Amazon stated that OpenAI, Anthropic, and other firms are already purchasing its custom processors. Jassy noted on the earnings call that there is significant demand for Trainium, with many customers excited about using the technology in its current form. Research from Trendforce shows that custom AI processor sales are expected to grow by 45% this year, compared with 16% growth for GPU sales. Amazon reported it has $225 billion in customer commitments for its Trainium processors. While AI stocks have experienced volatility recently, Amazon's sales are accelerating due to its leading position in AI cloud computing and rising revenue from custom processors.