Bank of America raises Amazon target on AI-driven AWS growth
Bank of America expects Amazon to beat Q2 estimates with $198.8 billion revenue, driven by 33% AWS growth from AI demand. The firm raised its price target to $310 as Anthropic workloads and cloud momentum offset higher capex.
*this image is generated using AI for illustrative purposes only.
Amazon.com Inc is poised to exceed expectations in its second-quarter results, driven by accelerating growth in Amazon Web Services (AWS) and robust artificial intelligence demand, according to Bank of America. The brokerage reiterated its Buy rating and raised its price forecast to $310, citing improved AI positioning and momentum in generative AI services as key catalysts for the second half of 2026. The firm's outlook suggests that heavy investment in AI infrastructure will strengthen AWS as a dominant supplier of scarce compute capacity.
AWS Growth and Earnings Outlook
Bank of America now projects second-quarter revenue of $198.8 billion and operating income of $24.1 billion, surpassing Wall Street consensus estimates of $196.8 billion and $23.6 billion, respectively. The firm increased its AWS revenue growth forecast to 33% year over year, up from a prior estimate of 31%, citing demand from Anthropic, OpenAI-powered Bedrock services, and broader enterprise adoption. Analysts expect third-quarter revenue guidance to range between $200.5 billion and $205.5 billion, noting that an earlier Prime Day may shift retail sales into the second quarter.
AI Spending and Strategic Investments
The brokerage anticipates Amazon could increase its 2026 capital expenditure outlook to about $210 billion due to higher memory costs and additional AI infrastructure investment. While this spending may weigh on near-term sentiment, analysts believe stronger cloud demand and improving AI monetization will offset these concerns. The firm estimates that Anthropic-related workloads alone could contribute more than $1.5 billion in sequential AWS revenue growth, while Amazon's stake in the AI startup could generate a significant mark-to-market gain.
Analyst Consensus and Price Targets
Amazon is scheduled to report second-quarter results on July 30. Wall Street estimates earnings per share of $1.82, up from $1.68 a year earlier, with revenue projected to reach $196.02 billion compared to $167.70 billion in the prior-year quarter. The stock maintains a Buy consensus rating with an average price forecast of $320.10.
| Firm | Rating | Price Forecast | Date |
|---|---|---|---|
| Wells Fargo | Overweight | $322.00 | July 21 |
| KeyBanc | Overweight | $335.00 | July 16 |
| Bank of America | Buy | $310.00 | July 21 |
| Wedbush | Outperform | $293.00 | July 16 |
Market Performance
Amazon.com shares were down 1.47% at $243.91 at the time of publication on Wednesday. The stock is a major holding in several exchange-traded funds, including the iShares Russell Top 200 Value ETF (IWX) at 8.32%, the Invesco Nasdaq Internet ETF (PNQI) at 9.89%, and the ClearBridge Large Cap Growth ESG ETF (LRGE) at 9.29%.
How will increased capital expenditures on AI infrastructure impact Amazon's free cash flow and profit margins in the near term?
What competitive threats does Microsoft Azure and Google Cloud pose to AWS's projected 33% growth rate?
How might rising memory costs affect the pricing strategy for Amazon's Bedrock generative AI services?
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