Amazon stock (AMZN) rose more than 4% on Monday after Phillip Securities upgraded the shares, citing strong demand visibility in cloud computing and the company’s positioning across the artificial intelligence (AI) industry.
The stock gained 4.5% in morning trading after Phillip Securities raised its rating to Buy from Accumulate and increased its price target to $330 from $320.
Analyst Helena Wang said Amazon’s positioning across the AI infrastructure market and strong growth at Amazon Web Services (AWS) supported a more positive outlook, despite concerns about near-term cash flow.
The upgrade follows a difficult reaction to Amazon’s third-quarter earnings, which triggered a sell-off despite strong growth in operating income and cloud revenue.
Phillip Securities raises Amazon price target
Phillip Securities highlighted AWS revenue growth of 39.3% year over year, its fastest pace in nearly five years, as a key factor behind the upgrade.
The firm also pointed to Amazon’s model-agnostic AI strategy, which combines its custom Trainium and Graviton chips with partnerships across major AI developers.
Wang raised Phillip Securities’ fiscal 2027 revenue estimate for Amazon by 2% and its adjusted net income forecast by 3%, citing stronger AWS growth.
The firm also increased its fiscal 2027 capital expenditure estimate by 3%.
Phillip Securities expects the investments to strengthen Amazon’s competitive position and create barriers to entry over the longer term.
According to Koyfin data, 42 of the 60 analysts covering Amazon rate the stock Buy, while another 16 assign it a Strong Buy rating.
Their 12-month price targets range from $230 to $405, with an average of $326.92.
AWS growth supports Amazon’s AI investment case
Amazon’s third-quarter results showed continued strength in its cloud business, although earnings per share fell short of analyst expectations.
The company reported earnings per share of $1.89, below consensus estimates.
However, operating income increased 61% year over year to $28.1 billion, while AWS revenue reached approximately $46 billion.
The cloud division’s growth has become an important part of Amazon’s investment case as demand for AI computing capacity increases.
Citi also raised its estimates for Amazon’s AI cloud revenue through 2028, citing accelerating demand from major cloud providers.
Meanwhile, UBS raised its Amazon price target to $352 from $348, pointing to management’s outlook for AWS growth above 40% in fiscal 2027 and 2028.
The brokerage also highlighted AWS’s $578 billion backlog, according to The Fly.
Wall Street remains divided over spending and cash flow
Despite the positive commentary on AWS, analysts remain cautious about Amazon’s near-term financial outlook, particularly its capital expenditure requirements and free cash flow conversion.
Morgan Stanley lowered its price target to $335 from $350 while maintaining an Overweight rating.
According to The Fly, the firm said near-term expectations for AWS “may have become too high.” However, it retained Amazon as a top pick.
TD Cowen also maintained a Buy rating, reinforcing the view that the post-earnings share price decline may have been excessive.
Scotiabank reduced its price target to $300 from $325, citing delayed free cash flow conversion and a change in its valuation methodology.
However, it maintained an Outperform rating, noting that the company’s long-term opportunity remains materially larger.
AWS growth and Amazon’s position across the AI infrastructure market remain central to the bullish investment case, while the pace at which its capital investments translate into cash flow remains a key concern.
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