Goldman Sachs raised its price target for Amazon to $375 from $335, keeping a Buy rating after Amazon's recent earnings blew past expectations. The key driver was Amazon Web Services, which grew revenue 36.7% year-over-year to $42.2 billion, marking its fastest surge in over four years.
Investors responded positively, pushing Amazon shares up more than 4% to $235. Goldman highlighted not only the cloud unit's strong performance but also solid demand for AI-related services and Amazon’s expanding custom chip business, which now runs at a $25 billion annual revenue rate. These chips, including Trainium and Graviton, help lower infrastructure costs for AI workloads.
Record AWS Backlog and Increased Capital Spending
AWS’s backlog surged to $496 billion, signaling strong future demand. CEO Andy Jassy expressed optimism about AWS potentially becoming a trillion-dollar revenue business in the future, despite current constraints. He noted that demand still outpaces available cloud capacity and forecasted that Amazon will struggle to meet all cloud demand in 2026. To support this growth, Amazon raised its 2026 capital spending plan to $220 billion, focusing heavily on data centers, AI infrastructure, and silicon development.
Amazon’s overall revenue for the quarter topped $200 billion, a 20% increase year-over-year, fueled by gains across cloud, advertising, and core retail operations. Piper Sandler also raised its target to $320, citing similar bullish views on Amazon’s growth prospects.
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