AMZN AWS Surge Boosts Outlook, Analysts Raise Targets

[MARKET BIAS: BULLISH] [SESSION: REGULAR] [CATALYST: ANALYST UPGRADE]

Amazon.com, Inc. (NASDAQ: $AMZN+WL) shares gained traction as analysts revised their targets higher following robust growth from its Amazon Web Services (AWS) division. Second-quarter revenue increased 20% year-over-year to $200.6 billion, and operating income climbed 43% to $27.5 billion. Sales from AWS rose 37% to $42.2 billion, alleviating investor concerns about the impact of artificial intelligence investments on profitability. Revenue from AI-specific products reached 15% of cloud sales.

Analysts at RBC Capital Markets maintained an outperform rating and raised their price objective, citing accelerated AWS growth, a stronger backlog, and enhanced margin performance. Morgan Stanley noted growing growth and profitability in AWS, while Wells Fargo kept Amazon as a top pick due to cloud margins exceeding expectations. Bank of America also highlighted improved AI momentum.

The company plans to increase capital spending to $220 billion from $200 billion, primarily for memory costs and infrastructure development. While this could affect near-term free cash flow, the increased outlay is expected to support long-term returns in cloud services and AI capabilities. Investors will be watching for AWS to sustain its growth trajectory and for the increased investment to translate into sustained gains in cloud revenue, margins, and backlog.