Morgan Stanley analyst Brian Nowak has laid out a bullish long-term scenario for Amazon (NASDAQ: AMZN), suggesting the stock could reach $500 by the end of 2027—roughly double its recent trading level. The projection hinges on the continued expansion of Amazon Web Services (AWS) and its potential to eventually generate $1 trillion in annual revenue.
During the company's September-quarter earnings call, CEO Andy Jassy said AWS could "very possibly" become a $1 trillion-a-year business, underscoring management's confidence in the cloud and artificial intelligence opportunity. Nowak notes that while AWS is still far from that milestone—currently running at about $170 billion in annualized sales—the path to such scale could create substantial shareholder value.
The $500 bull case
Nowak's model assumes AWS could reach $1 trillion in revenue within the next eight to ten years, with Amazon's overall earnings before interest and taxes (EBIT) potentially hitting $500 billion over the same period. Under that trajectory, he sees the stock reaching $500 by the end of 2027. The analyst has also raised his price target to $335 from $330, maintaining an Overweight rating, which implies about 28% upside from the recent close of $261.31.
The more immediate investment case does not depend on AWS hitting its ultimate target. Instead, investors could benefit from continued cloud growth, rising AI demand, and the resulting expansion in Amazon's earnings. As JPMorgan's 8,000 S&P 500 target hinges on AI earnings shift, the broader market is also looking to AI-driven profitability.
Capacity is key
The rapid development of AI has created an enormous need for computing power, making data-center capacity central to Amazon's growth strategy. Nowak estimates Amazon will add 6 gigawatts of capacity in 2026 and another 8 gigawatts in 2027, with a similar pace thereafter. Jassy has said Amazon is on track to double its power capacity by the end of 2027 compared to 2025 levels.
Without sufficient infrastructure, AWS may struggle to convert strong customer demand into revenue growth. The ability to bring capacity online quickly is therefore a critical factor.
Monetizing each watt
Capacity alone isn't enough. Nowak emphasizes that the revenue generated per watt is equally important. He estimates each incremental watt currently generates about $8 in revenue for Amazon. If that figure rises to $12 per watt, AWS could potentially reach $1 trillion in annual revenue as early as 2035. Improvements in computing efficiency, software, chip performance, and data-center utilization could all boost this metric.
This focus on efficiency is part of a broader trend in AI infrastructure. As CoreWeave's Q2 revenue doubled to $2.58B with a $104B backlog, the market is watching how cloud providers monetize their AI investments.
Risks and skepticism
The $1 trillion projection remains highly dependent on continued growth in AI demand. Beyond 2028, Amazon could face constraints from server availability, power efficiency, regulatory approvals, and construction timelines. There is also uncertainty over how long the current pace of AI investment can continue.
DA Davidson analyst Gil Luria called the $1 trillion AWS revenue projection "bold speculation," noting that while AWS could grow 40% to 50% this year, "extrapolating beyond that is more than ambitious." He added that "there is no hard information Mr. Jassy or anybody else has to quantify a market that didn't even exist three years ago."
For investors, the trillion-dollar AWS target is better viewed as a long-term indication of ambition rather than a near-term earnings forecast. Even if AWS falls short, sustained AI demand and capacity expansion could still drive meaningful gains. As Peter Thiel's Amazon stake masks a bigger bet on AI power, the AI trade remains a key driver for the stock.
This article is for informational purposes only and does not constitute financial advice.
