Morgan Stanley names Amazon a Top Pick, lifts target to $350 on faster AWS growth

AMZN rose 5% to $262.42 on Monday after Morgan Stanley named Amazon a Top Pick and raised its price target to $350 from $335. Analyst Brian Nowak kept his Overweight rating, so this is a higher conviction call rather than a rating upgrade. The move outpaced MSFT and GOOGL, which each gained about 1%.

The core of the call is cloud acceleration. Morgan Stanley now models Amazon Web Services revenue growth of 47% in 2027 and 42% in 2028, up from its prior 41% and 37%. The revision follows NVDA's disclosure that AWS expects to purchase and deploy about 2 million NVIDIA GPUs across those two years. The bank also sees AWS operating margins reaching 42% in 2027 and 44% in 2028, which underpins an estimate of roughly $16.50 in 2028 earnings per share; the $350 target is about 21 times that figure.

The growth is expensive. Morgan Stanley raised its Amazon capital spending forecasts to $355 billion for 2027 and $365 billion for 2028. Beyond the cloud, the note flags better visibility into Bedrock, Amazon's AI model service, AI shopping agents during the holiday season, and robotics as a 2027 catalyst: every additional 10% of global units handled through robotics-enabled fulfillment centers could save $2 billion to $4 billion a year.

The bank's scenarios span a $220 bear case to a $410 bull case. Measured from the post-rally price, the $350 target implies about 33% upside, versus roughly 40% from Friday's $250 close. The next checkpoint is Amazon's third-quarter report after the close on Oct. 29, where AWS growth, capacity spending and margins will be compared with these more ambitious expectations.