Amazon stock: Morgan Stanley outlines bull vs base AWS path
Morgan Stanley reiterates a $335 base price target and a $500 bull case for Amazon, arguing AWS could reach $1 trillion in annual revenue over 8-10 years and citing 2Q26 commentary on AI and compute capacity needs.
AMZN Morgan Stanley on AMZN (Bull Case Sees $500 PT) See AWS's road to $1 trillion of revenue over the next 8-10 years, which paints a path toward $500 billion of company-wide EBIT and a $500 share price by year-end 2027.
Our base case remains $335 PT, with the bull case increasingly in play if AWS delivers as we think it could.
Amazon's $1 trillion vision for AWS revenue reinforces the high-ROIC opportunity ahead.
Believe Amazon is confident given 2Q26 earnings commentary laying out a vision of $1 trillion of AWS revenue, roughly 6x larger than the current ~$170 billion annualized, with long-term returns similar to the core AWS business over the past ~20 years.
Amazon believes AWS could very possibly become a $1 trillion annual revenue business over time, with very appealing accompanying free cash flow and return on invested capital.
Importantly, Amazon sees margins and returns in AI tracking what it saw with the core AWS business at the same point of evolution and actually a little ahead.
Bringing on compute capacity remains the gating factor.
As innovation and demand for GenAI tools continue to scale, we believe each hyperscaler's ability to bring on compute capacity is the key factor driving forward revenue growth.
Estimate Amazon will bring on 6-8 GW of compute capacity in 2026/2027.
While visibility beyond 2027 is limited given server/rack purchase volumes, power requirements, regulatory uncertainty, and physical limits to faster data center openings, we believe Amazon is executing at an organized and rapid clip.
As a base case, we assume adding 8 incremental GW per year is a reasonable range going forward.
Analyst: Brian Nowak