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Amazon stock pops after Morgan Stanley details 5 catalysts, lifts price target
Amazon (AMZN) stock rose more than 3% in early trading on Monday after Morgan Stanley named it a top pick and raised its price target to $350 from $335, outlining five catalysts that could drive the stock higher.
The new target implies about 40% upside from Friday's close of $250. With a bear case of $220 a share and a bull case of $410, the firm sees a 3:1 risk-reward ratio.
"In a market of see-sawing AI leaders and laggards, we detail 5 catalysts ahead to re-rate shares and drive material outperformance," analyst Brian Nowak, who kept his Overweight rating, wrote in a note Sunday.
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 change follows Nvidia's (NVDA) disclosure that it expects AWS to buy and deploy about 2 million of its GPUs over those two years. The extra chips also lift the firm's capital spending forecast for Amazon to $355 billion in 2027 and $365 billion in 2028.
Amazon knows how to build big. The AI boom is testing just how big it can go.
At an internal staff meeting in September, AWS CFO John Felton had a joke for Prasad Kalyanaraman, the executive overseeing much of Amazon's AI infrastructure expansion.
"You've taken us free cash flow negative as a company, so congratulations," Felton said, according to a recording of the meeting obtained by Business Insider.
Just two years ago, Wall Street was debating what Amazon would do with its growing cash hoard. Now, cash flow has evaporated as Amazon embarks on its biggest bet ever, spending $220 billion this year alone to build the physical backbone for AI.
At the meeting, Kalyanaraman did not dispute Felton's premise. Amazon's machine-learning and AI business is "hugely free cash flow negative," he said, adding that he expects the company's free cash flow to remain negative for "the next couple of years or so."
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Why Amazon (AMZN) Stock Is Up Today
Shares of cloud computing and online retail behemoth Amazon (NASDAQ:AMZN) jumped 3.3% in the morning session after Morgan Stanley named the company a top pick and raised its price target to $350 from $335.
Morgan Stanley analyst Brian Nowak maintained an Overweight rating and lifted his target by $15, outlining a three-to-one risk-reward profile and roughly 40% implied upside from Friday's $250 close, in research reported by CNBC. In a note to clients, Nowak argued that Wall Street underappreciates the operating runway for Amazon Web Services, projecting cloud revenue growth will accelerate to 47% in 2027 as enterprise adoption of its Bedrock artificial intelligence platform broadens. Per CNBC, Nowak outlined five catalysts supporting the call, emphasizing Amazon's positioning in agentic commerce and compounding margin gains as robotics deployment ramps across its fulfillment centers.
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