Amazon Earnings in Focus as UBS Boosts Target on Surging AWS Cloud Prospects
All eyes are on Amazon.com Inc. (NASDAQ: AMZN) this week as the e-commerce and cloud computing behemoth prepares to release its fourth-quarter financial results. The report comes amid renewed Wall Street optimism for its lucrative Amazon Web Services (AWS) division, with UBS raising its price target on the stock to $311 from $310 while maintaining a Buy rating.
Analyst Stephen Ju of UBS described Amazon as a "coiled spring" ahead of the earnings release, pointing to a anticipated second consecutive quarter of acceleration in AWS revenue growth. The firm modestly increased its target after rolling forward its valuation model and raising estimates for AWS revenue and capital expenditures.
The more bullish stance is underpinned by Amazon's aggressive infrastructure expansion plans. UBS highlighted the company's aim to double data center capacity by 2027, leading the bank to raise its aggregated capital expenditure estimates for 2025 through 2027 from $300 billion to a staggering $344 billion, with the AWS portion alone climbing from $225 billion to $260 billion.
"The market has yet to fully price in a scenario where AWS revenue doubles by 2028, driven by this step-up in capital intensity," the UBS note stated. The firm estimates this investment surge could generate an incremental $20 billion in free cash flow for Amazon in that year, providing significant fuel for further growth or shareholder returns.
The upcoming earnings are seen as a critical test of whether Amazon's heavy bets on cloud and artificial intelligence infrastructure are translating into sustained financial momentum. AWS remains the profit engine for the company, offsetting the thinner margins of its core retail operations.
Market Voices: Analysts and Investors Weigh In
Michael Torres, Portfolio Manager at Horizon Capital: "UBS is right to focus on the long-term AWS story. The capex guide is eye-watering, but it signals Amazon's commitment to maintaining its cloud leadership. This isn't just about current demand; it's about building the platform for the next decade of AI and enterprise computing."
Sarah Chen, Retail Investor: "As a long-term shareholder, I find this reassuring. The retail side will always have ups and downs, but AWS is the crown jewel. They're spending to stay ahead of Microsoft and Google, and that's exactly what they should be doing."
David R. Miller, Editor of 'The Skeptical Investor' Newsletter: "This is classic Wall Street groupthink. They raise a price target by a measly dollar and call it an upgrade? It's theater. The real story is the astronomical capex—$344 billion! That's a massive bet on an AI bubble that hasn't yet proven it can pay off. Shareholders will be footing the bill for years while hoping the growth fairy appears."
Priya Sharma, Technology Analyst at ClearView Research: "The key takeaway is the expected acceleration in AWS. If confirmed, it will ease concerns about market share loss and show that the AI-driven demand cycle is genuinely taking hold. The margin profile of that growth will be just as important as the top-line number."
Amazon is scheduled to report its fourth-quarter earnings after the market closes on February 5.