• TD Cowen lowered its price target on Amazon to $340 from $350, but maintained a Buy rating, reflecting modest near-term caution amid elevated capex.
  • The revised target still implies upside, as analysts remain bullish on Amazon Web Services (AWS) and advertising growth as long-term drivers.
  • Capital expenditure intensity, particularly in data centers and AI infrastructure, is a key focus for investors watching near-term margins.

TD Cowen trimmed its price target on Amazon to $340 from $350, though the firm reiterated a Buy rating, signaling confidence in the e-commerce and cloud giant's secular growth story despite near-term headwinds. The adjustment comes as analysts weigh strong momentum in AWS and advertising against rising capital spending, which has become a focal point for investors.

"We remain positive on Amazon's long-term trajectory, driven by AWS acceleration and advertising share gains, but we see near-term pressure from elevated capex," wrote the analyst in a note. The new target, down roughly 3% from the prior, still suggests roughly 10% upside from current levels.

Amazon's capital expenditure has surged as the company invests heavily in data centers, fulfillment networks, and AI-related infrastructure. While these investments underpin future growth, they also weigh on free cash flow and near-term margins, a dynamic that has led to some caution among analysts. AWS, which contributes disproportionately to operating income, continues to be a bright spot, with growth reaccelerating as enterprises increase cloud spending. Advertising revenue also remains a robust profit driver, expanding faster than core retail.

The analyst's move aligns with a broader Wall Street narrative: Amazon's core businesses are strong, but the massive capex cycle—tied to AI and logistics—creates uncertainty around short-term profitability. Competitors like Microsoft and Google are also ramping up spending, intensifying the focus on capital allocation efficiency.

"Investors are watching how quickly Amazon can convert these investments into higher returns," the note added. The firm expects operating margins to improve gradually as capex growth moderates and higher-margin revenue streams like AWS and ads scale.

Amazon shares were little changed following the target cut, trading near $310. The stock has gained roughly 20% year-to-date, outperforming the broader market, as investors bet on its dominant position in cloud and digital advertising. TD Cowen's Buy rating contrasts with some more cautious calls from other banks that have flagged regulatory risks and e-commerce competition.

A representative for Amazon declined to comment on the analyst's report.