• Morgan Stanley projects Amazon could hit $500 by end-2027 if AWS growth accelerates, nearly doubling from current levels.
  • The bull case hinges on AWS eventually reaching $1 trillion in annual revenue, fueled by AI compute demand and expanding capacity.
  • Amazon recently raised its 2026 AI spending forecast to $220 billion; base-case target remains $335, implying roughly 28% upside.

A Bullish Bet on AWS

Amazon.com Inc. (AMZN) could nearly double from current levels by the end of 2027, according to a new scenario outlined by Morgan Stanley. The investment bank’s most optimistic projection sees the stock reaching $500, driven by an acceleration in growth at its cloud-computing unit, Amazon Web Services (AWS).

“If AWS growth reaccelerates and the business eventually scales to $1 trillion in annual revenue, the stock could re-rate significantly,” said a Morgan Stanley analyst in a note to clients on Thursday. The analyst, who requested anonymity to discuss internal projections, emphasized that the bull case depends on sustained AI-related demand and continued capacity expansion.

Morgan Stanley’s base-case target remains $335, implying roughly 28% upside from current levels. The firm’s more cautious outlook reflects lingering uncertainties around AWS growth sustainability, competition from Microsoft’s Azure and Alphabet’s Google Cloud, and the pace of Amazon’s massive capital expenditure.

AI Spending Surge

Amazon has been investing heavily in AI infrastructure, raising its 2026 AI spending forecast to $220 billion—a figure that caught some investors off guard. The company has signaled that it sees AI as a transformative opportunity, with AWS at the center of its strategy.

“The demand for AI compute is staggering,” said the analyst. “If AWS can capture even a fraction of that, the upside is enormous.”

However, the heavy spending has also raised questions about near-term profitability. In recent quarters, Amazon’s operating income has been pressured by depreciation and higher costs associated with data-center buildouts. Still, many on Wall Street remain bullish, with several firms revising their price targets upward in recent months.

Market Reaction and Outlook

Investors have had mixed reactions to Amazon’s aggressive AI push. The stock has been volatile in 2025, trading in a wide range as sentiment shifts with each earnings report and macroeconomic headline. Regulatory concerns and tariff policies have also influenced tech valuations broadly, though Amazon’s diverse business model provides some insulation.

“The key variable is AWS’s growth trajectory,” said a portfolio manager at a large asset manager who declined to be named. “If it can sustain 20%-plus growth, the stock will likely outperform. But if it decelerates meaningfully, the downside could be significant.”

Morgan Stanley’s bull case is not without its skeptics. Some analysts argue that reaching $1 trillion in AWS revenue would require unprecedented market share gains, especially as competition intensifies. Others point to potential execution risks in AI initiatives, including chip supply constraints and the need for massive power and cooling infrastructure.

Despite these concerns, Amazon remains one of the most widely held stocks among institutional investors, and its long-term growth story is intact. As one market strategist put it, “Amazon has a habit of proving the skeptics wrong.”

For now, the market is watching AWS’s next move. Morgan Stanley’s analysts said they are confident in their base case but noted that the bull scenario is “achievable if the company continues to execute flawlessly.”

Investor Takeaways

  • AWS acceleration is critical: Watch quarterly AWS growth rates and management commentary on AI demand.
  • Capital expenditure will remain elevated: Expect continued pressure on free cash flow as Amazon invests in infrastructure.
  • Competition is intensifying: Microsoft and Google are spending heavily on AI and cloud, potentially limiting AWS’s growth ceiling.

For investors, the path to $500 is a long one, but the opportunity is real. As always, diversification and a long-term horizon are essential.

Correction: An earlier version of this article misstated the timing of Amazon’s AI spending forecast update. The company raised its 2026 forecast in its fourth-quarter earnings call, not in the first quarter.