JPMorgan has assigned Amazon a $365 price target, implying nearly 50% upside from the October 29 closing price of $243.79. JPMorgan values Amazon at 26.5 times the bank's forecast for Amazon's 2028 earnings. JPMorgan views the investment spending as an early step toward a substantially larger opportunity. Analyst Doug Anmuth identifies Amazon's custom chips and AI services as further sources of growth. Anmuth also points to a sharp increase in enterprise use of Amazon's Bedrock platform.
Amazon Web Services increased third-quarter revenue by 39.3% from a year earlier to $46 billion. AWS recorded the fastest revenue growth in nearly five years. AWS reached an annualized revenue run rate of $184 billion. AWS operating income increased 55% to $17.8 billion. CEO Andy Jassy expects AWS growth to exceed 40% in both 2027 and 2028. Jassy expects AWS annual revenue to reach $1 trillion within five to 10 years. AWS's backlog rose 189% from a year earlier to $578 billion. The backlog represents contracted work awaiting recognition as revenue and provides Amazon with visibility into future demand.
Amazon made $77.3 billion of capital investments during the third quarter. Amazon reaffirmed an expected capital expenditure total of about $220 billion for 2026. Jassy said Amazon expects to spend "meaningfully more" in 2027 to add data centers and servers to satisfy demand. Amazon's free cash flow over the trailing 12 months shifted from a $14.8 billion inflow a year earlier to a $42.4 billion outflow. Higher expenditure on property and equipment was the main reason for the change.
Amazon shares dropped as much as 7% in after-hours trading following Thursday's results. Amazon shares declined more than 7% again during Friday's premarket trading. The declines reflected concerns about spending and a fourth-quarter sales forecast that fell short of expectations.
JPMorgan argues that strong AWS demand, limited capacity and the potential for infrastructure to produce returns over several years justify the spending. Amazon says servers and networking equipment can recoup investment costs in under three years. Amazon says data centers remain useful for much longer periods. JPMorgan's projection of nearly 50% upside remains uncertain.
JPMorgan Sets $365 Price Target for Amazon, Suggesting 50% Upside
BenzingaShare
Summary
JPMorgan set a $365 price target for Amazon, indicating a near 50% price analysis upside from its $243.79 close on October 29. The bank values the stock at 26.5 times 2028 earnings, citing AWS growth, custom chips, and AI as key factors. AWS revenue hit $46 billion in Q3, up 39.3%, with a $184 billion annualized run rate. Amazon spent $77.3 billion on capital in Q3, with CEO Andy Jassy expecting more in 2027. Shares dropped over 7% after the earnings report.
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