Amazon shares advanced on Monday after Morgan Stanley raised its price objective on the e-commerce and cloud computing giant, pointing to artificial intelligence, cloud services, and automated fulfillment as key growth catalysts. The bank lifted its target to $350 from $335, maintaining an Overweight rating and naming Amazon among its top picks. The revised target suggests roughly 40% upside from Friday's closing price of $250.
Amazon's stock gained about 2.7% during the session, recovering part of the losses from last week's technology selloff. The shares had fallen 4.7% last week as investors reassessed valuations and spending tied to artificial intelligence. Despite the recent pullback, Amazon remains up more than 8% year-to-date.
AWS Growth Could Support Earnings
Morgan Stanley analyst Brian Nowak argued that investors are underestimating the contribution Amazon Web Services (AWS) can make to the company's revenue and profitability. He expects AWS to deliver year-over-year growth of 47% in 2027, with sustained strong revenue expansion through 2028. The analyst also highlighted Amazon's Bedrock service, which offers access to AI models and tools for building applications.
"We continue to think AWS's growth and profit runway is under-appreciated," Nowak wrote in a research note. The outlook comes as investors scrutinize 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, where AI systems can perform 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 monetizing 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 fulfillment centers 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.
This article is for informational purposes only and does not constitute financial advice.
