All eyes this week are on Amazon's massive e-commerce business as its Prime Day deals extravaganza nears its end. But analysts with Morgan Stanley raised their price target for Amazon stock largely because of a different side of the tech giant's business: its profit-driving cloud division.
A team of Morgan Stanley analysts led by Brian Nowak reiterated an overweight and "top pick" designation for Amazon stock in a client note Friday. They also upped their Amazon price target to 300, from 250. That implies roughly 35% upside from Amazon stock's closing price Thursday.
The analysts are anticipating that growth will accelerate for Amazon Web Services, the company's cloud division. It also helps that concerns about tariffs are easing. Morgan Stanley cuts it earnings estimates for Amazon in the spring to account for 145% tariffs on China. With those levies lowered to 30%, Nowak said he is "re-raising" 2026 earnings estimates.
"We adjust for (a) more manageable macro outlook, higher e-commerce forecast, more constructive advertising outlook, and faster AWS growth," Nowak wrote in the client note.
Why Amazon's Cloud Growth Could Accelerate
Nowak's note is particularly optimistic on Amazon's AWS growth accelerating.
He noted that Anthropic's sales growth is ramping up, with The Information reporting that the AI startup had reached a $4 billion annual revenue run rate. Amazon has invested $8 billion into Anthropic. As part of that deal, Anthropic uses AWS as its primary cloud provider. Anthropic's growth should boost its contribution to AWS' revenue, Nowak wrote.
Meanwhile, AWS' growth excluding Anthropic AI training revenue has proved "durable" despite supply constraints for advanced computing chips. Those supply constraints are expected to ease soon, Nowak added, which will "open the door for faster GPU and non-GPU enabled workload growth" for AWS.
Beyond that, a recent survey of chief information officers showed Amazon and Microsoft were likely to continue winning greater share of corporate IT budgets.
"Notably, Amazon is tactically expected to gain further share over Microsoft, Google and Oracle," Nowak wrote. "These data give us more confidence in AWS's still strong position."
Amazon Stock On Track To Close Week Higher
Amazon stock is up more than 1% at 225.15 in recent action on the stock market today. The gains put Amazon stock on track to close the week slightly higher. Shares fell Tuesday in response to a report that early Prime Day sales were tracking slower than previous years.
Amazon stock is ahead roughly 2.5% year to date, according to IBD MarketSurge. Shares have bounced back from a steep spring slump after the U.S. eased tariffs on Chinese goods.
Amazon is expected to report second-quarter results later this month.
The IBD Stock Checkup tool, meanwhile, shows Amazon stock holds an IBD Composite Rating of 92 out of a best-possible 99. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
