Amazon AMZN shares gained on Monday with investors welcoming fresh analyst support for its cloud computing business.
Another catalyst pushing the stock ahead was a Dan Ives note stating that the massive artificial intelligence spending cycle could approach a turning point sooner than previously expected.
The stock gained as much as 3.7% at the time of writing after spending the previous two sessions in the red.
The broader market also provided support, with the Nasdaq, S&P 500 and Dow Jones Industrial Average all trading higher as investors moved past last week’s technology-led selloff.
JPMorgan backs AWS growth
JPMorgan analyst Doug Anmuth highlighted the accelerating momentum at Amazon Web Services (AWS), which reported third-quarter revenue growth of 39.3% year over year, its fastest pace in nearly five years.
The cloud division also ended the quarter with a contracted backlog of $578 billion, growing at a triple-digit annual rate.
The figure provides substantial visibility into future demand as businesses expand their AI infrastructure.
JPMorgan’s commentary was viewed as a buying opportunity by investors on Monday.
‘AI spending growth peaking in 2027’
Adding to the positive sentiment, Dan Ives of Yorkville Ives & Co. has revised his outlook for Big Tech’s capital expenditure cycle.
Enormous spending by tech giants has been a source of worry for investors.
Ives now expects the growth rate of capital expenditure among major technology companies to peak in 2027, moving forward his previous forecast of 2028 or 2029.
Importantly, he does not expect spending itself to decline immediately. Big Tech and hyperscalers could still spend more than $1 trillion on capital expenditure in 2027, even as the pace of growth moderates.
Ives expects free cash flow at Amazon, Microsoft, Alphabet and Meta to reach a trough in the first half of 2027, followed by an improvement in the second half.
He sees a more substantial recovery in 2028, potentially leading to a major cash flow expansion in 2029 and 2030.
He also believes around 10% to 15% of planned US data center capacity could be delayed or abandoned because of power and infrastructure constraints, although he views the companies that already control computing capacity as better positioned.
Ives maintains an Outperform rating and $300 price target on Amazon.
Alexa Shopping gets a new AI upgrade
Amazon is also expanding its AI ambitions beyond cloud computing and into its retail business.
The company began rolling out a text-based version of Alexa for Shopping to select US customers on November 6, allowing users to search for products, build shopping carts, place orders and track deliveries through text messages.
Customers can also send photographs of recipes or products and ask Alexa to find the relevant items. The assistant can remember shopping preferences and help reorder frequently purchased essentials.
Amazon said more than 400 million customers had used Alexa for Shopping in the previous 12 months, highlighting the scale of its consumer AI ambitions. The text-based service is expected to reach more US customers in the coming weeks.
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