Amazon Stock Price Forecast: AWS Growth Hits Four-Year High as Earnings Beat Across the Board, Shares May Reach $350

Amazon's sharp stock rally was primarily driven by its second-quarter earnings beating market expectations across the board, with the reacceleration of AWS growth standing out as the biggest highlight.

According to the earnings report, Amazon's second-quarter revenue reached $200.6 billion, up 20% year-over-year, beating market expectations; AWS revenue reached $42.2 billion, up 37% year-over-year, marking its fastest growth rate in the past 18 quarters and significantly exceeding the market's previous expectation of approximately $40.5 billion. Meanwhile, the company's advertising revenue increased 26% year-over-year to $19.8 billion, continuing to serve as a high-margin growth engine second only to AWS.

The reacceleration of the AWS business has greatly eased previous market concerns over Amazon's declining competitiveness in the cloud computing space. Over the past few quarters, investors have focused on whether the rapid growth of Microsoft Azure and Google Cloud would eat into AWS's market share; however, the scorecard delivered by AWS this quarter proves that enterprise AI training, inference, and generative AI applications continue to drive growth in cloud computing demand.

Meanwhile, Amazon's management sent more positive signals regarding AI development. CEO Andy Jassy stated that global demand for AI computing power is still far higher than the infrastructure the company can provide, and some of AWS's computing resources for 2027 have already been booked by customers in advance. This implies that AI infrastructure will remain highly active over the next few years, further bolstering market confidence in AWS's long-term growth.

However, it is worth noting that to meet AI demand, Amazon raised its full-year capital expenditure budget for 2026 from approximately $200 billion to $220 billion, continuing to increase investments in data centers, AI chips, and infrastructure construction. Impacted by the rapid growth in capital expenditures, the company's free cash flow over the past 12 months has turned negative. While the market chose to focus more on AWS's rapid growth this time, whether future AI investments can be successfully translated into profitability remains a key risk factor for investors.

From a Wall Street perspective, most institutions believe that this earnings report further strengthens the investment thesis of Amazon as a core beneficiary of AI infrastructure.

Evercore ISI stated that AWS re-achieving growth of nearly 40%, combined with double-digit growth in its advertising business, indicates that Amazon has not only regained growth momentum in cloud computing but also continuously improved its profitability. The firm believes that this earnings report is sufficient to ease previous market concerns over AWS's competitiveness, and it continues to look favorably on Amazon's earnings performance over the next few quarters.

Reuters cited analyst views pointing out that AWS recording its fastest growth rate in over four years was the biggest surprise of this earnings report. As Microsoft ( MSFT ), Alphabet ( GOOGL) and Amazon, the three major cloud providers, successively released strong results, the market's confidence that the global AI infrastructure investment cycle will last for several years has been further strengthened. Analysts generally believe that as long as enterprise AI demand maintains high growth, AWS is still expected to maintain rapid expansion.

Management is equally confident about future growth. Andy Jassy stated that the demand for AI computing power currently continues to outstrip supply, and AWS will continue to expand its infrastructure investment over the next few years. He believes that AWS has the opportunity to develop into a business with annual revenues of $1 trillion in the future. This statement also shows that the company remains optimistic about the long-term growth prospects of the AI cloud computing market.

However, in the coming quarters, capital expenditures will remain an important variable affecting Amazon's valuation. If AI-related revenues can continue to maintain high-speed growth, high capital expenditures will be viewed by the market as a long-term competitive advantage; conversely, if AWS growth slows down again while free cash flow remains under pressure, the market may once again worry about the return cycle of AI investments, thereby limiting further upside for the stock price.

Amazon stock price weekly chart, Source: TradingView

Looking at the weekly chart of Amazon's stock price, two candlesticks tested the support of the 60-week moving average and both failed to break below it. Meanwhile, this week's candlestick is highly likely to form a bullish candle with a long lower shadow, buoyed by positive earnings, which will further boost the market's bullish momentum. Amazon's overall upward trend is expected to continue, with the potential to reach new all-time highs.

Currently, the primary resistance level to watch on the upside is $260. If it breaks through, the stock price will test the resistance range of $280-$300. If the stock breaks and holds above $300, the upside room toward $350 will be opened.

On the downside, the primary support level to watch is around $225. If this level is lost, the stock price may fall further back toward the $200 mark.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.