Key Takeaways:
- AWS growth reaccelerated to 37%, its fifth straight quarter of acceleration
- 24/7 Wall St. sets a $340.96 target, implying 33.1% upside from $256.33
- Advertising runs at a $19.8 billion quarterly clip as AI clears $25 billion annualized
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Amazon shares target $341 as AWS growth accelerates to 37%
Amazon's AWS growth reaccelerated to 37% in the second quarter, its fifth straight quarter of acceleration, as revenue hit $200.61 billion.
"AWS will very possibly be a trillion dollar annual revenue business over time," Chief Executive Andy Jassy said on the earnings call.
Q2 revenue rose 19.62% to $200.61 billion, with operating income of $27.46 billion jumping 43.24%. AWS backlog swelled to $496 billion. Advertising grew 26% to a $19.8 billion quarterly run rate, while AI and custom-chip businesses each cleared a $25 billion annualized pace.
24/7 Wall St. set a $340.96 price target, implying 33.1% upside from the Aug. 29 close of $256.33. Wall Street's consensus target sits at $327, with 16 analysts rating the stock Strong Buy and 43 at Buy.
The bull case reaches $390.96, or 52.61% upside, assuming AWS growth holds above 35% and third-quarter operating income lands near the top of the $22.5 billion to $26.5 billion guide. The bear case sits at $291.59, still 13.83% above the current price, with second-quarter capital spending of $54.21 billion, up 68.44%, pushing trailing free cash flow to negative $7.6 billion.
Shares have climbed 12.49% over the past month and 12.76% year to date, though they pulled back 2.09% in the last week and sit below the 52-week high of $287.20. Amazon Business runs at a $60 billion annualized clip, adding another high-margin stream.
Amazon's 21x earnings multiple screens below Microsoft's 28x, whose Azure grew 43% in fiscal Q4, and above Alphabet's 15x, where Google Cloud posted 82% growth in Q2. The company and Nvidia plan to deliver 2 million additional GPUs for agentic AI workloads, a sign of the capacity race across cloud providers. At 22x forward earnings against a projected $14.42 per share, the stock's valuation looks reasonable versus peers, according to 24/7 Wall St.
24/7 Wall St. projects the stock reaching $408.66 by 2028 and $546.46 by 2030, assuming AWS sustains its AI buildout and retail margins hold.
The acceleration points to AI demand lifting Amazon's highest-margin segments. Investors will watch the third-quarter earnings call for whether AWS holds above 35% growth and whether capital spending pressures free cash flow into 2027.
This article is for informational purposes only and does not constitute investment advice.
