TLDR
- Roth Capital increased Amazon price target to $295 from $270, calling it their top Mega Cap selection for early 2026.
- Wall Street underestimates margin benefits from Q4 layoffs and expected Q1 workforce cuts, according to analyst Rohit Kulkarni.
- AWS achieved 20% growth in Q3 2025, the fastest pace since 2022, with analysts forecasting mid-20% expansion in 2026.
- Dozens of firms raised targets recently, with prices ranging from $250 to $315 based on cloud growth and efficiency gains.
- Key catalysts include Trainium 3 launch, Rufus AI assistant conversion impact, and AWS-OpenAI partnership clarity.
Amazon shares ticked up 0.22% to $239.68 as Roth Capital joined a growing list of firms raising price targets on the tech giant. The investment bank lifted its target from $270 to $295 just days before fourth-quarter earnings.
Analyst Rohit Kulkarni believes investors are missing the full impact of recent cost reductions. Amazon cut staff in Q4 2025, and more layoffs appear likely in Q1 2026.
These workforce reductions should deliver stronger margin improvements than current Wall Street models predict. Roth Capital designated Amazon as its top Mega Cap pick for the first half of 2026.
The firm highlighted three upcoming catalysts that could reshape the AI narrative around the stock. The Trainium 3 chip launch positions Amazon to compete directly with Nvidia in AI processing.
Rufus, the company’s AI shopping tool, could boost conversion rates and drive revenue growth. More details about the AWS-OpenAI partnership may surface during the earnings call next week.
AWS Delivers Accelerating Growth
The cloud division posted 20% growth in Q3 2025 on a currency-neutral basis. This marked the fastest expansion rate since 2022 and accelerated from 17% in the first half of the year.
Multiple analysts now expect AWS to achieve mid-20% growth rates throughout 2026. Amazon’s plan to double cloud infrastructure by 2027 supports these projections.
Morgan Stanley leads the Street with a $315 price target. Jefferies raised its target to $300, while Oppenheimer set a $305 target based on capacity expansion plans.
At least twelve major firms boosted Amazon price targets in recent months. The upgrades center on two themes: operational efficiency driving margins higher and accelerating AWS revenue.
Retail Strength and Margin Expansion
Amazon’s retail business continues showing resilience. Jefferies data revealed 47% of consumers maintained spending levels over three months, while 15% increased purchases despite inflation.
The company generated $691.33 billion in trailing twelve-month revenue with 10% year-over-year growth. Wedbush raised its target to $250 on strong retail data and advertiser sentiment.
UBS lifted its target to $271 after raising Gross Merchandise Value and gross profit estimates by roughly 2% for 2026 and 2027. The firm reduced concerns about tariff impacts on demand.
Wells Fargo and Stifel both set $295 targets. Stifel noted AWS outpaced Microsoft Azure and Google Cloud Platform in quarterly acceleration, reversing the Q2 pattern.
Benchmark maintained a $295 target despite ongoing data center and satellite investments pressuring free cash flow. The firm expressed confidence as AWS hit 20% growth ahead of schedule.
Goldman Sachs kept its $275 target with a Buy rating. The firm forecasts AWS will sustain over 20% revenue growth with operating margins in the low-to-mid-30% range through 2026.
Cantor Fitzgerald named Amazon a top AI deployment pick. The firm pointed to innovation acceleration across AI, autonomous vehicles, robotics, and quantum computing.
Greater clarity on the AWS-OpenAI relationship could emerge during next week’s earnings report. This partnership details may influence how investors value Amazon’s AI positioning.
