Amazon shares rose on Monday as Morgan Stanley raised its price target on the e-commerce and cloud computing company, citing growth opportunities in artificial intelligence, cloud services and automated fulfilment.
The investment bank increased its target to $350 from $335 and maintained an Overweight rating on the stock, naming Amazon one of its top picks.
The new target implies approximately 40% upside from Friday’s closing price of $250.
Amazon AMZN gained around 2.7% on Monday, recovering some of the losses recorded during last week’s technology sell-off.
The stock fell 4.7% last week as investors reassessed artificial intelligence-related valuations and spending.
Morgan Stanley analyst Brian Nowak said investors were underestimating the contribution Amazon Web Services (AWS) could make to the company’s revenue and profits, while its e-commerce infrastructure could also help it benefit from the development of AI-powered shopping.
AWS growth could support Amazon’s earnings
Morgan Stanley expects AWS to remain a significant growth driver as demand for cloud computing and AI infrastructure expands.
Nowak said investors were not fully appreciating the cloud division’s growth potential and profitability prospects.
He expects AWS to record year-over-year growth of 47% in 2027, with the business maintaining strong revenue growth through 2028.
The analyst also highlighted Amazon’s Bedrock service, which provides access to AI models and tools for building applications.
Greater visibility into demand for AI-focused cloud services could help investors better assess AWS’s contribution to Amazon’s overall performance.
“We continue to think AWS’s growth and profit runway is under-appreciated,” Nowak wrote in a research note.
The outlook comes as investors scrutinise the returns technology companies can generate from substantial AI infrastructure investments.
Amazon’s cloud business could benefit from continued demand for computing capacity, while stronger growth could also support profitability.
Agentic AI and robotics offer additional opportunities
Beyond cloud computing, Morgan Stanley sees Amazon as a potential beneficiary of agentic AI, in which AI systems can carry out tasks on behalf of users.
The development of AI-powered shopping tools could change how consumers discover products and complete purchases.
However, Nowak believes Amazon’s established e-commerce infrastructure and customer base position it to participate in this shift.
“AMZN is a key agentic enabler and winner, and that remains unchanged even through [the launch of Meta’s personal AI agent] Muse,” Nowak wrote.
He added that Amazon could continue monetising its existing advantages as AI-powered commerce develops.
The analyst also suggested that the performance of Meta’s Muse shopping features during the holiday season could demonstrate the importance of Amazon’s infrastructure to the wider agentic commerce market.
Morgan Stanley also sees potential in Amazon’s robotics operations.
The expansion of robotic fulfilment centres through new construction and upgrades to existing facilities in 2027 could highlight the company’s position in physical AI, which combines artificial intelligence with machines operating in the real world.
Wall Street remains bullish despite recent losses
Morgan Stanley’s positive outlook broadly reflects analyst sentiment on Wall Street.
According to LSEG data cited in the reports, 62 of the 64 analysts covering Amazon have a Buy or Strong Buy rating on the stock.
Amazon shares have gained more than 8% year to date, although they have retreated from recent levels.
The stock has fallen around 12% since closing at $284.02 on August 3 and recently moved below its 50-day moving average near $257.
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