Benzinga Pro data showed Amazon shares down 2.19% at $238.46 at publication on Friday. Investors weighed increasing AI infrastructure costs and pressure on free cash flow despite favorable Wall Street assessments of cloud growth. The broader market also declined, with the Nasdaq Composite losing 3.61%. The S&P 500 dropped 1.80%.
Amazon reaffirmed a capital spending forecast of approximately $220 billion for 2026. Amazon indicated that investment would increase further in 2027 to expand AI infrastructure. AWS revenue increased 39.3%, and AWS's backlog totaled $578 billion. However, Amazon's trailing 12-month free cash flow declined to negative $42.4 billion. The spending raised questions about the timing of improved cash generation and shareholder returns.
Analysts reviewing Amazon's third-quarter results emphasized management's forecast for AWS growth exceeding 40% in both 2027 and 2028. Several analysts nevertheless reduced price targets because of capital spending, weaker retail performance and valuation concerns.
Bank of America Securities analyst Justin Post retained a Buy recommendation while reducing Amazon's price target from $320 to $317. Post increased the 2027 revenue forecast from $961 billion to $968 billion. Post raised projected 2027 operating profit from $140 billion to $145 billion. Post increased the 2027 GAAP earnings-per-share estimate from $10.24 to $10.60. Post raised expected 2027 capital spending from $302 billion to $310 billion. Post increased projected 2028 earnings per share from $12.81 to $13.55.
KeyBanc analyst Justin Patterson retained an Overweight recommendation while cutting the price target from $350 to $345. Patterson increased revenue projections for 2027 and 2028 by 1% and 3%, respectively. Patterson raised earnings-per-share forecasts for those years by 5% and 8%, respectively. Patterson's revised 2027 revenue estimate was $970.74 billion. Patterson increased projected 2027 earnings per share from $11.02 to $11.58.
Cantor Fitzgerald analyst Deepak Mathivanan retained Overweight, reduced the price target from $310 to $280, and increased 2027 revenue and operating-income forecasts by 1% and 4%, respectively, citing additional AWS capacity, Bedrock growth and rising demand for Graviton and Trainium.
Rosenblatt analyst Scott Devitt retained Buy and a $360 price target, projected 2027 revenue of $968.49 billion, operating income of $148.3 billion and GAAP earnings per share of $10.71, raised capital spending forecasts for 2027 and 2028 to approximately $304 billion and $364 billion, respectively, and increased projected 2028 earnings per share to $14.78.
Guggenheim analyst Simeon Siegel retained Buy and a $320 price target, citing AWS growth of 39.3%, the fastest in 19 quarters, record consolidated operating margins and management's expectation of AWS growth exceeding 40% in both 2027 and 2028 as support for the long-term investment case.
Yorkville Ives analyst Dan Ives retained Outperform and a $300 price target, argued that high AI infrastructure spending is necessary because enterprise demand exceeds capacity, and highlighted the $578 billion backlog, triple-digit AI revenue growth and management's view that AWS could ultimately generate $1 trillion in revenue.
Citizens analyst Andrew Boone retained Market Outperform, cut the price target from $315 to $275, valued Amazon at approximately 26 times projected 2027 GAAP earnings per share of $10.58, and identified AWS, logistics and grocery as strengths despite the $42.4 billion free-cash-flow outflow.
D.A. Davidson analyst Gil Luria took the most cautious position, retaining Neutral and a $250 price target based on 27 times calendar 2027 earnings per share, and said encouraging AWS acceleration was tempered by high expectations, slower retail growth and uncertainty about agentic commerce.
Analysts generally framed the central near-term question as whether Amazon's AI capital spending can produce sustained AWS growth, wider margins and improved free cash flow over the coming years.
Amazon to Spend $220 Billion on AI Infrastructure in 2026
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Summary
Amazon to Spend $220 Billion on AI Infrastructure in 2026, with more planned for 2027. AWS revenue rose 39.3%, and its backlog hit $578 billion. Trailing 12-month free cash flow turned negative at $42.4 billion. On-chain news shows continued focus on AI + crypto news as major players ramp up spending.
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