Amazon shares dip 1% despite Morgan Stanley $335 target and Druckenmiller stake boost
Amazon shares declined 1.07% to $259.85 on Monday despite Morgan Stanley maintaining an Overweight rating with a $335 target and Stanley Druckenmiller boosting his stake by over 1,000%. Analyst Brian Nowak projects AWS could reach $1 trillion in annual revenue by 2034-2035, driven by AI infrastructure demand and pricing power improvements from $8 to $12-$15 per watt. The firm estimates this could lead to $500 billion in company-wide operating profit, supporting a potential $500 share price by 2027.
*this image is generated using AI for illustrative purposes only.
Amazon.com Inc (NASDAQ: AMZN) shares faced selling pressure on Monday, trading down 1.07% to $259.85 at the time of publication. The decline occurred alongside broader market weakness, even as prominent financial institutions and investors signaled strong confidence in the company’s long-term growth trajectory.
Morgan Stanley Projects AWS Revenue Potential
Morgan Stanley analyst Brian Nowak maintained an Overweight rating on Amazon with a $335 price target. Nowak framed the current artificial intelligence infrastructure buildout as a high-return opportunity for major cloud providers. He stated that Amazon’s second-quarter commentary reinforced his view that AWS could eventually generate $1 trillion in annual revenue. This figure represents roughly six times the current run rate of about $170 billion.
Nowak’s model relies on two primary drivers: compute capacity expansion and pricing power. He projects capacity additions of 6 to 8 gigawatts over 2026 and 2027, with roughly 8 gigawatts annually beyond that period. He noted that visibility fades further out due to uncertainties around hardware purchasing, power availability, and data center construction speeds.
On pricing, Nowak pegs AWS’s current revenue generation at roughly $8 for every incremental watt of capacity this year. His model suggests that if this figure reaches $12 per watt, AWS could hit $1 trillion in annual revenue by 2035. At $14 to $15 per watt, that milestone could arrive in 2034.
| Metric | Value | Source |
|---|---|---|
| Current AWS Revenue Run Rate: | $170 billion | Morgan Stanley |
| Projected Future AWS Revenue: | $1 trillion | Morgan Stanley |
| Current Revenue per Watt: | $8 | Morgan Stanley |
| Target Revenue per Watt: | $12 to $15 | Morgan Stanley |
Nowak translated the trillion-dollar revenue estimate into an estimated $300 billion of AWS operating profit. Adding projections for Amazon’s retail operations, he estimated roughly $500 billion in company-wide profit. Using a 21-times earnings multiple and a 10% discount rate, he arrived at a 2027 year-end share price near $500, representing close to 100% upside from current levels.
Institutional Stake Increase
Stanley Druckenmiller’s Duquesne Family Office disclosed in a Friday 13F filing that it increased its Amazon position by more than 1,000% to 541,600 shares. The fund also more than doubled its call options on the stock. Despite these bullish signals from both analysts and major investors, Amazon shares remained under pressure during Monday’s trading session.
What the Numbers Show
The divergence between short-term price action and long-term analyst projections highlights a disconnect between immediate market sentiment and structural growth expectations. While Morgan Stanley models a potential tripling of the share price to $500 by 2027 based on AI-driven cloud expansion, the stock currently trades near $260. This gap underscores the reliance on sustained execution in capacity buildout and pricing power to realize the projected $1 trillion AWS revenue milestone.
How might potential bottlenecks in power availability and data center construction timelines impact Morgan Stanley's projection of adding 6 to 8 gigawatts of capacity by 2027?
What specific competitive threats from Microsoft Azure or Google Cloud could hinder AWS's ability to increase its revenue per watt from $8 to the projected $12-$15 range?
Given Stanley Druckenmiller's significant increase in both equity and call options, how might his trading strategy influence short-term market volatility versus long-term institutional sentiment?
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