Amazon Stock Stumbles After Rally; Analysts Outline Path Back to Record Highs
After reaching record highs in early August, Amazon's stock has since fallen more than 7%, reversing a strong post-earnings rally. The recent drop follows a period of optimism driven by the company’s Q2 results and CEO Andy Jassy’s comments on AI hardware profitability and data center economics. Analysts at Morgan Stanley have raised their price target for Amazon to $350 from $335, suggesting significant upside potential if key performance indicators improve. The analysts highlight a five-point checklist that includes demonstrating the financial benefits of AI investments and moderating capital expenditures as critical steps toward regaining investor confidence. Jassy emphasized during Q2 earnings calls that AWS is generating strong free cash flow in later years from servers used for AI, which initially fueled optimism among investors. The broader market has also been influenced by similar narratives around long-term value retention in AI hardware. With Amazon’s third-quarter results due on October 29 and ongoing investor focus on the company's strategic direction under Jassy and CFO Brian Olsavsky, analysts are watching for signs that AWS is delivering sustainable returns. Morgan Stanley remains bullish but acknowledges the need for clearer evidence of financial progress.
Topics: AI investment Amazon stock AWS CEO commentary Morgan Stanley price target