Morgan Stanley names Amazon a top pick amid AI growth

Morgan Stanley has named Amazon a top pick, raising its price target for the company from $335 to $350 while maintaining an Overweight rating. The bank's optimism is driven by five key catalysts, primarily led by the anticipated growth of Amazon Web Services (AWS).

Analysts expect AWS to benefit significantly from the deployment of approximately 2 million Nvidia GPUs over the next few years. Consequently, Morgan Stanley has increased its revenue growth forecasts for AWS to 47% in 2027 and 42% in 2028. Other potential drivers include improved AWS margins, increased visibility for the Bedrock AI service, AI-integrated shopping features, and robotics-driven savings.

Despite the bullish outlook, the bank noted that high capital expenditure forecasts—projected at $355 billion in 2027 and $365 billion in 2028—will lead to close scrutiny of returns. Amazon is scheduled to report its third-quarter results on October 29.