Amazon.com Inc (NASDAQ:AMZN) continues to draw investor attention as it expands its core businesses and deepens its push into high-growth markets.
Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Amazon with a price forecast of $290.
Sheridan said Amazon used its annual Amazon Web Services re: Invent conference in Las Vegas to highlight that AWS intends to grow by building on its cloud foundation while scaling aggressively into the AI era.
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The analyst noted the company showed how it will balance its legacy strength, steady cloud migration demand, with its future, which will be defined by AI-driven computing and next-generation infrastructure.
He noted that AWS executives repeatedly emphasized three themes.
First, AWS will keep developing its own custom chips to lower computing costs while maintaining a deep partnership with Nvidia Corp (NASDAQ:NVDA) for top-tier AI capacity.
Second, executives believe AI agents will transform how enterprises operate by automating tasks, learning from interactions, and improving efficiency.
Third, Bedrock, the platform that provides access to a wide mix of AI models, continues to scale quickly with more than 100,000 customers, roughly double from a year ago.
Amazon also unveiled its new Nova 2 family of multimodal AI models and expanded access to third-party models.
Can Amazon Reaccelerate Growth?
Investor debate has centered on whether Amazon can accelerate growth again, especially relative to cloud peers in an AI-driven world.
Sheridan argued that Amazon's recent earnings results and its re: Invent announcements together offer investors more confidence.
The analyst noted AWS is well-positioned to reaccelerate revenue growth as AI evolves from a few foundational models into a broader set of applications, agents, and workloads requiring lower-cost, more efficient infrastructure.
According to him, AWS is preparing for the coming wave of AI adoption much as it did during earlier shifts in computing, storage, and databases.
As the world's largest cloud provider, AWS can support enterprises, developers, and model builders at scale.
Sheridan said the company's approach mirrors the formula that led to Amazon's success in e-commerce: broad supply, easy access, strong matching of supply and demand, and a relentless focus on customer needs.
Long-Term AWS Growth And Margin Outlook
The analyst's recent research strengthened his conviction that AWS can deliver more than 20% compounded revenue growth over the next several years.
He also noted AWS reaching GAAP EBIT margins in the low-to-mid 30% range, even as Amazon continues to invest heavily in AI infrastructure and absorbs higher depreciation costs.
Sheridan added that Amazon's broader businesses, e-commerce and digital advertising, also show constructive trends heading into the next quarter.
At re: Invent, Amazon reinforced its three-layer AI strategy of infrastructure, models, and applications.
It introduced the Graviton 5 custom chip, Trainium3 instances and new AI Factories that let customers deploy dedicated AI infrastructure in their own data centers.
It expanded Bedrock with new controls and fine-tuning options, launched the Nova 2 AI model family, and added more open-weight models.
In applications, Amazon introduced new autonomous agents and the Nova Act service for automating complex workflows.
Market Share Pressures And Competitive Landscape
Sheridan acknowledged that AWS has lost some cloud market share but attributes it to a larger revenue base, Azure's enterprise strength, and heavy competition for AI workloads.
Even so, AWS backlog growth remains strong, and AI demand is driving significant new commitments.
His analysis estimated AWS AI services could generate about $10.7 billion in revenue in 2025 and $23.1 billion in 2026, contributing several hundred basis points to AWS's total growth.
AMZN Price Action: Amazon.com shares were up 0.17% at $229.47 at the time of publication on Friday, according to Benzinga Pro data.
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