TLDR
- Amazon closed at $250.69 on Tuesday, up 2.06%, but sits about 15% below its August high.
- Q3 EPS of $1.89 and revenue of $201.94 billion both missed estimates.
- AWS revenue hit a record $45.9 billion, up 39%, with a $578 billion backlog.
- Jassy sees AWS growing more than 40% in 2027 and 2028.
- Analyst consensus is Moderate Buy with an average target of $321.02.
Amazon closed at $250.69 on Tuesday, up 2.06% for the day. The stock still sits about 15% below its August record high.
Investors have spent the past week sorting through a split report card. Third-quarter results landed Oct. 29, and the numbers pointed in two directions.
Earnings per share came in at $1.89, short of the $1.97 estimate. Revenue of $201.94 billion also missed the $202.22 billion forecast, though it grew 12.1% from a year ago.
Then came the cloud numbers. AWS posted record revenue of $45.9 billion, up 39%.
That marks six straight quarters of faster growth. The unit now runs at a $184 billion annual pace.
A $578 billion line of customers waiting
AWS ended the quarter with a $578 billion backlog. Customers are waiting for new data center capacity to come online.
CEO Andy Jassy told investors AWS could grow more than 40% in both 2027 and 2028. He also said it could reach $1 trillion in annual revenue within five to 10 years.
Custom chips are doing some of the lifting. Commitments for Graviton and Trainium jumped 20 times from a year ago.
Amazon says those chips offer 30% to 40% better price performance than alternatives. It also plans to offer Trainium outside AWS in late 2027.
Bedrock is another bright spot. Fortune 500 spending on the service rose sevenfold, and token volume grew 17 times.
What the build-out costs
Amazon expects to spend about $220 billion on data centers in 2026, with more planned for 2027. Reports also cited a $34.8 billion free-cash-flow outflow.
Jassy said the spending should bring higher returns and more free cash flow than he expected. Because data centers last for years, the costs will weigh on earnings well beyond 2027.
Amazon booked over $68 billion in non-operating profit in the first three quarters of 2026. Most of it came from paper gains on its Anthropic stake.
Analysts expect earnings of $10.58 per share in 2027. That puts the stock at 19.4 times trailing earnings and 22.8 times forward earnings.
Wall Street remains upbeat. MarketBeat lists a Moderate Buy consensus with an average target of $321.02.
Freedom Broker raised its target to $330, and Phillip Securities upgraded the stock to Strong Buy. Rosenblatt kept a buy rating with a $360 target.
Sterling Manor Financial opened a new Amazon position worth about $830,000 in the third quarter, an SEC filing shows. Institutions own 72.20% of the stock.
Amazon has also kicked off early Black Friday deals as the holiday shopping season begins.
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