Key Takeaways
- KeyBanc upgraded Amazon’s price target from $285 to $325, suggesting potential upside of approximately 30% from present trading levels.
- Anthropic’s revenue run rate skyrocketed from $9B in December 2025 to $30B by April 2026, providing significant tailwinds for AWS.
- Approximately 60% of Anthropic’s infrastructure spending flows through AWS, according to KeyBanc’s analysis.
- CEO Andy Jassy suggested Amazon may begin selling Trainium chips externally, building on chip revenue that has already crossed $20B via AWS.
- Shares of Amazon declined 1.4% to $247.18 on Monday, trading just 1.4% beneath the record closing high established in November 2025.
Analyst sentiment toward Amazon is strengthening in advance of the company’s April 29 quarterly report, fueled primarily by remarkable expansion at AI developer Anthropic and robust momentum within AWS.
Justin Patterson from KeyBanc elevated his Amazon valuation target to $325 from $285 over the weekend. This represents approximately 30% upside compared to Monday morning’s trading price.
Patterson simultaneously increased his revenue projections for 2026 by 1% and his 2027 forecast by 2%.
Amazon stock declined 1.4% Monday, finishing at $247.18 amid wider market anxiety surrounding escalating U.S.-Iran geopolitical tensions. Friday’s close stood at $250.56 — merely 1.4% under the all-time closing peak from November 2025.
The backdrop entering earnings presents an intriguing opportunity.
Anthropic has emerged as a pivotal component of the AWS narrative. The company’s annual recurring revenue catapulted from $9 billion in December 2025 to $30 billion in early April 2026 — growth that demands attention.
KeyBanc’s research indicates AWS receives approximately 60% of Anthropic’s infrastructure expenditures. This represents substantial revenue tied directly to one of the world’s most rapidly expanding AI enterprises.
Anthropic has maintained aggressive product development. The company launched Claude Opus 4.7 this month — representing its most sophisticated reasoning model to date. Additionally, it introduced Claude Mythos, a “hyper-agentic” model that Anthropic has restricted from public release citing national security considerations.
AWS Acceleration Expected
Patterson highlighted his expectation for a “combination of capacity gains, AI diffusion, and client expansion” to propel AWS during the first quarter. He projects 30% year-over-year expansion for AWS — representing acceleration from 2025, when AWS generated $128.7 billion in annual revenue, marking 20% growth versus the previous year.
Impressive quarterly results from Taiwan Semiconductor (TSM) last week reinforced confidence that AI infrastructure spending remains vigorous entering earnings season.
Dan Ives from Wedbush shared similar optimism. “We are seeing no cracks in AI demand on the chips/hardware or software front,” he stated, characterizing it as a “bright green light” for owning leading technology stocks.
Emerging Revenue Streams: Chips and Connectivity
Amazon’s Trainium semiconductor division has generated over $20 billion through AWS, expanding at triple-digit percentage rates annually. In his latest shareholder correspondence, Jassy revealed openness to distributing Trainium chips to external customers — representing a potentially significant new revenue opportunity.
On the retail front, KeyBanc highlighted healthy grocery segment performance and the imminent debut of Amazon Leo, the firm’s satellite broadband offering. Amazon recently completed an agreement to acquire Globalstar, securing additional spectrum to facilitate Leo’s deployment.
Patterson does identify one headwind: the continuing Iran situation has interrupted maritime traffic through the Strait of Hormuz while elevating fuel expenses. He anticipates this will pressure Amazon’s second-quarter outlook. The company’s 3.5% fuel surcharge imposed on third-party merchants earlier this month may partially mitigate this challenge.
Amazon will announce first-quarter financial results on April 29.
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