TLDR
- Morgan Stanley’s Brian Nowak raised his Amazon price target to $350 from $335 and named it a “top pick.”
- Amazon stock rose 2% to $254.96 in premarket trading Monday after closing Friday at $250, down 5%.
- The stock has fallen 12% since Aug. 3 and sits below its 50-day moving average near $257.
- Nowak expects AWS to keep outsized growth through 2028, with capital spending of $355 billion in 2027 and $365 billion in 2028.
- Third-quarter earnings are set for Oct. 29, with AWS growth, capex and margins in focus.
Amazon stock rose 2% to $254.96 in premarket trading on Monday. It ended last week down 5% at $250. Morgan Stanley’s new $350 price target is 40% above that Friday close.
Analyst Brian Nowak raised his target from $335 and named Amazon a “top pick.” He kept his Overweight rating on the stock. The call comes after a rough stretch for the name.
Amazon has fallen 12% since closing at $284.02 on Aug. 3. It has also slipped below its 50-day moving average, which sits near $257. The 200-day average is $251.92, so the stock is hovering just above that line.
Nowak said the market has been reduced to “see-sawing AI leaders and laggards.” He still thinks Amazon is a good bet. AI stocks took a hit last week, but Wall Street has stayed upbeat on this one.
Why Morgan Stanley Likes Amazon
Nowak expects AWS to keep “outsized” top-line growth through 2028. He thinks that growth will lead to strong profit. He also expects Amazon to spend $355 billion on capex in 2027 and $365 billion in 2028 because of added chip purchases.
He called Amazon a key AI “enabler and winner.” That view comes even as Meta’s consumer AI agent, Muse, threatens traditional e-commerce. Meta stock fell 4% in Monday’s coverage.
Nowak thinks Amazon can use its e-commerce setup and loyal user base to keep making money from AI. He also pointed to Muse’s holiday shopping plans. If they go poorly without Amazon, he said, that would show how much Amazon matters to agentic commerce.
Other news is pulling in both directions. Amazon’s cloud unit grew at its fastest pace in 18 quarters in the second quarter. Its Bee acquisition has brought new devices and a paid software tier.
Concerns Weigh on the Stock
Investors are still worried about Amazon’s roughly $220 billion AI commitment. They fear rising capex could squeeze near-term free cash flow. Capacity limits and possibly falling AI-compute prices add to the doubts.
Broad tech stocks are also under pressure. Inflation worries have raised bets on higher interest rates. Investors have moved toward value and dividend-paying sectors.
Elon Musk’s idea for an “X Shop,” or “Grokazon,” is another long-term risk. It follows Amazon’s move to block some AI shopping agents. Rivals could use it to challenge Amazon in agent-driven commerce.
Wall Street remains mostly positive. FactSet shows 60 analysts at Buy and one at Hold, with an average target of $332.96. MarketBeat puts the consensus at “Moderate Buy” with a $322.53 target.
Insiders have been sellers. CEO Matthew Garman sold 14,541 shares on Aug. 21 at about $259. CFO Brian Olsavsky sold 6,172 shares the same day at $260.31. Both trades were made under pre-arranged plans.
Amazon reports third-quarter results on Oct. 29. In the second quarter, it posted $200.61 billion in revenue, up 19.6% from a year earlier. Investors will watch AWS growth, capex and margins on the next report.
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