Amazon (AMZN) Stock: BofA Says AWS Could Be the Biggest AI Winner — Here’s Why

TLDR

• Bank of America reiterated a Buy rating on Amazon with a $310 price target
• AWS is set to add ~15GW of AI data center capacity in 2026–2027, more than Alphabet or Meta
• BofA estimates AWS builds capacity at ~$25B per GW, cheaper than Alphabet ($37B) and Meta ($45B)
• Needham also reiterated Buy with a $300 target, citing strong AWS compute demand
• Amazon raised $25 billion in debt to fund its AI infrastructure buildout

Bank of America analyst Justin Post says Amazon could come out on top in the AI race. Post reiterated a Buy rating on Amazon stock with a $310 price target on Tuesday.

Amazon.com, Inc., AMZN

The call centers on AWS and its ability to build more AI data center capacity than its closest rivals — and do it cheaper.

Amazon stock was trading around $246, up 0.75% on the day. The average Wall Street price target sits at $319.02, implying roughly 30% upside from current levels.

BofA projects Amazon will add about 15 gigawatts of AI data center capacity across 2026 and 2027. That puts it well ahead of Alphabet at around 9GW and Meta at 6GW.

By 2030, BofA expects Amazon’s total installed capacity to reach approximately 58GW, outpacing both rivals.

The firm also argues Amazon is doing this more efficiently than anyone else.

AWS Has a Cost Advantage

BofA estimates it costs AWS around $25 billion to add one gigawatt of capacity. Alphabet is running at about $37 billion per GW, and Meta is closer to $45 billion.

The firm points to Amazon’s custom Trainium and Graviton chips, its scale, and a broader mix of cloud workloads as the reasons behind that cost edge.

Post raised his 2027 capital spending forecast for AWS to $230 billion, up from $196 billion. Reports that AWS asked server suppliers to increase third-quarter shipments by up to 30% backed that move up.

BofA also noted that demand for AI training, inference, cloud workloads, and internal AI products remains “supply constrained.” That should keep spending strong across the sector.

Needham Piles On

Needham separately reiterated its Buy rating and $300 price target on Tuesday, also citing strong AWS compute demand.

The firm flagged Amazon’s $25 billion debt raise as a clear signal that demand for AWS compute continues to outpace supply.

Needham went a step further, suggesting Amazon should cut competing capital projects and redirect funds entirely toward AWS — which it views as having the highest return on invested capital of any Amazon business unit.

Amazon’s return on invested capital currently stands at 13%, with a debt-to-equity ratio of 0.53.

AWS also dropped several product updates this week, including the availability of Anthropic Claude Sonnet 5 in Amazon Bedrock, new Amazon WorkSpaces for AI Agent capabilities, and new AI features across SageMaker.

Fitch Ratings assigned Amazon an ‘AA-‘ rating on its new unsecured notes, citing its strong position in e-commerce and cloud computing.

Amazon currently holds a Strong Buy consensus on TipRanks, based on 44 Buy ratings and one Hold.

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