Amazon's AWS Outperforms, Boosting Analyst Confidence in AI Strategy
Wall Street analysts are increasingly confident in Amazon’s artificial intelligence strategy following strong performance from its cloud business, Amazon Web Services (AWS). In the second quarter, AWS revenue grew by 37% year-over-year—surpassing expectations—and reported a backlog of $496 billion. Analysts raised price targets and maintained positive outlooks on Amazon's stock as they highlighted robust demand for AI services and expanding margins. Despite slightly weaker-than-expected third-quarter revenue guidance, analysts noted that AWS is experiencing an inflection point in growth and leading the cloud-based artificial intelligence race. Capital expenditures also rose sharply to $54.21 billion this quarter—up 68% year-over-year—with projections for continued high spending into 2026. Amazon addressed concerns about return on investment by providing detailed data center asset life cycles, which helped reassure investors. Analysts from major firms like UBS and Bank of America raised their price targets significantly, citing strong AI adoption trends such as AWS Bedrock demand and the anticipated use of Trainium chips in 2027. These developments suggest that Amazon is well-positioned to benefit from future growth waves driven by agentic AI.
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Topics: AWS growth capital expenditures cloud computing earnings stock performance