.png){kind=logo}
Amazon stock has fallen about 11% year to date, yet Wall Street is turning more bullish as AWS growth accelerates and advertising adds another strong earnings engine. Citi and JPMorgan both raised their Amazon price targets to $285 from $265, citing stronger cloud demand tied to AI workloads.
At the same time, Amazon is preparing for a much larger spending cycle that could shape how investors judge the stock through 2026.
Citi now expects AWS revenue to grow 28% to 29% in 2026. It then sees growth accelerating to 37% in 2027 as partnerships with Anthropic and OpenAI scale further. That forecast follows a strong fourth quarter in 2025. AWS revenue rose 24% year over year to $35.6 billion, marking its fastest growth in 13 quarters. Margins also remained firm during that period. AWS posted a 35.0% operating margin, showing that growth continued without a sharp drop in profitability.
At the same time, Amazon is pushing deeper into AI infrastructure. AWS is becoming a larger platform for model training and inference as enterprise demand grows. Custom chips are also adding to that momentum. Trainium and Graviton now generate more than $10 billion in annual revenue, giving Amazon another lever inside its AI business.
CEO Andy Jassy also outlined the scale of the long-term opportunity. He said AWS could become “about a $300 billion annual revenue, run rate business” within 10 years.
Even so, Amazon’s stronger cloud outlook comes with a larger bill. The company plans to spend about $200 billion in 2026 on AI infrastructure, chips, robotics, and satellites. That would mark another steep step up in capital spending. Amazon’s capex reached $83 billion in 2024, then climbed 59% to $131.8 billion in 2025.
A move to $200 billion in 2026 would represent a 51.7% increase from 2025. In turn, investors are weighing growth momentum against the cost of building new capacity. That pressure already showed up in cash flow figures. Free cash flow fell 70% year over year to $11.2 billion in 2025 from $38.2 billion in 2024.
Meanwhile, operating cash flow moved in the opposite direction. It rose 20% to $139.5 billion in 2025 from $115.9 billion a year earlier. Can Amazon sustain AWS growth above 20% while absorbing a record investment cycle?
Amazon is not the only company spending heavily on AI. Microsoft and Alphabet are also expanding infrastructure to meet demand for model training and inference. Alphabet CFO Anat Ashkenazi said the company is investing heavily in AI compute capacity for Google DeepMind to meet significant demand from cloud customers. That points to a wider race across big tech.
Still, Amazon has another earnings driver that helps balance the picture. Its advertising business rose 23% year over year to $21.3 billion in the fourth quarter of 2025. That matters because advertising requires far less infrastructure than cloud or fulfillment. As a result, Amazon can lean on a higher-margin business while AWS becomes more capital-intensive.
Jassy said sponsored products remain Amazon’s largest ad offering. He added that shopping, browsing, and streaming signals, paired with AI and machine learning, help deliver relevant ads.
Advertising has also become more than a side business. Growth in sponsored listings, search monetization, Prime Video inventory, and seller tools has turned it into a meaningful offset to heavier AI spending.
Also Read: Amazon Stock Near $210: Is This the Right Time to Buy?
Amazon stock price drew stronger Wall Street support as AWS growth accelerated on rising AI demand, and advertising expanded into a larger profit driver. Even so, the company’s sharp rise in capital expenditure will remain central to investors' assessment of whether growth can keep pace with spending.
