Amazon's stock has stumbled since closing at a record $284 on Aug. 3, dropping more than 7% as investors wait for the next catalyst. The earlier rally was fueled by CEO Andy Jassy's explanation of how AI data center investments would generate free cash flow, with the stock soaring over 15% in a single day after Q2 earnings.
Morgan Stanley analysts this week added Amazon to their top picks and raised their price target to $350 from $335, implying 33% upside. They laid out a five-point checklist for what could drive shares higher: strong AWS revenue growth, better-than-expected AWS operating margins, proof of Bedrock's strategic value, success in agentic AI, and confidence in physical AI (robotics).
AWS profitability is seen as the primary near-term driver, with Morgan Stanley projecting high-40s% incremental EBIT margins in 2027/2028. The source notes that Jassy, who launched AWS before Microsoft Azure became a true competitor, is likely to keep winning cloud business. The article also highlights Jassy's comments that Amazon will continue partnering with Nvidia while offering customers choice in chips.
The source is a CNBC investment club analysis, so it reflects that perspective rather than independent reporting. It does not present differing viewpoints, but it does caution that even with revenue growth, stock valuation depends on forward earnings per share, not just sales.