Shares of Amazon climbed nearly 4% to CA$28.41 on Monday after Phillip Securities upgraded the stock to Buy from Accumulate and lifted its price target from $320 to $330, citing accelerating growth in Amazon Web Services and improving demand visibility. The move offers bulls a fresh catalyst, but the real question is whether cloud momentum alone can justify a capital-spending plan that has spooked parts of Wall Street. Phillip Securities Lifts Amazon to Buy — But Is a $578 Billion Cloud Backlog Enough to Outweigh a Record Spending Binge?
Shares of Amazon surged 3.9% to CA$28.41 after Phillip Securities upgraded the stock to Buy from Accumulate and raised its U.S. price target from $320 to $330, pointing to accelerating cloud growth and stronger demand visibility. The upgrade landed just days after a bruising earnings report that sent shares tumbling — and it forces investors to confront a stark question: Is the cloud business growing fast enough to pay for the biggest capital-spending plan in corporate history?
• AWS Is Growing at Its Fastest Clip in Five Years — and Customers Keep Signing Up.
AWS revenue jumped 39.3% to $46 billion in Q3 2026 , marking the sixth consecutive quarter of accelerating growth. More importantly, CEO Andy Jassy guided AWS to more than 40% growth in both 2027 and 2028, with a contracted backlog of $578 billion — more than double a year earlier. That backlog — essentially future revenue already locked in under signed contracts — is what Phillip Securities means by "demand visibility." It gives Amazon a rare degree of forward earnings certainty for a business this large.
• The $220 Billion Tab Still Makes Investors Nervous.
The expansion is being funded by about $220 billion of 2026 capital spending, pushing trailing 12-month free cash flow to a $42.4 billion outflow. Free cash flow is the money left over after a company pays its bills and invests in itself — and Amazon's is now deeply negative. Third-quarter capital spending hit $77.3 billion, nearly $20 billion above expectations , and management signaled meaningfully higher spending in 2027. Phillip's upgrade essentially bets that the revenue pipeline justifies the cash drain. Not all analysts agree.
• The Earnings Miss Hasn't Gone Away.
Amazon posted EPS of $1.89 versus the $1.97 analysts expected, and the stock fell more than 7% in after-hours trading last Thursday. Despite accounting for less than a quarter of Amazon's total revenue, AWS generated approximately 63% of the company's operating income — meaning any slowdown in the cloud unit would disproportionately hit profits. Phillip's confidence rests on the bet that AWS won't slow.
• The Real Test Is Turning Contracts Into Cash.
Jassy indicated that AWS cloud capacity for 2026 is sold out, capacity for 2027 is largely booked, and substantial commitments have already been made for 2028. But data center capital goes out about two years before servers earn anything , so the payoff from today's spending won't surface until 2028 at the earliest. Investors buying on the upgrade are betting Amazon can bridge a multiyear cash-flow gap with a backlog that only keeps climbing.