Shares jumped after Morgan Stanley analyst Brian Nowak raised his Amazon price target to $350 from $335 and named the stock a top pick, calling it one of the most underappreciated stories in big tech. The new target sits about 40% above Friday's close , and it arrives ten days before Amazon reports third-quarter earnings on October 29. For investors in the Canadian-listed shares (AMZN.TO, trading at CA$29.55, up 3.8%), the question is whether this rally has room to run — or whether the cost of Amazon's AI ambitions will catch up first.

  • Wall Street's Bull Case Rests on a Cloud Unit Growing at Breakneck Speed. Nowak wrote that "AWS's growth and profit runway is under-appreciated," and Morgan Stanley expects AWS growth of 47% in 2027. That projection builds on an already scorching trajectory: Q2 2026 net sales hit $200.6 billion, up 20% year-over-year, with AWS revenue alone surging 37% to $42.2 billion.

Nowak bases his $350 target on roughly 21 times his 2028 earnings-per-share estimate of about $16.50 — a premium valuation that demands continued acceleration.

  • The $220 Billion Question: Spending Now, Hoping for Profits Later. Amazon raised its 2026 cash capital expenditure forecast to $220 billion, $20 billion more than originally planned , mostly to build data centers, buy AI chips, and expand server capacity. That spending has pushed trailing free cash flow — the cash left after all capital investment — into negative territory.

Amazon is racing to serve a $496 billion order backlog that has grown 2.5 times over the past year , but investors will need to see that backlog convert into actual profit, not just revenue.

  • AI Shopping and Robots Add Sizzle Beyond the Cloud. Nowak's five catalysts include AI-powered shopping tools and warehouse robotics alongside AWS growth.

New fulfillment-center builds in 2027 could showcase Amazon's physical-AI ambitions; by mid-2025, the company had deployed more than one million robots across over 300 facilities worldwide. These bets aim to cut per-package delivery costs, directly widening profit margins on every order.

  • Earnings in Ten Days Will Test the Thesis. Amazon stock had fallen 12% from its August highs before Monday's bounce , meaning sentiment was already fragile. Nowak sees a 3-to-1 risk-reward ratio, with a $220 bear case and $410 bull case. The October 29 report will reveal whether AWS margins held up against ballooning infrastructure costs — the single datapoint that could validate or deflate the $350 call.