Prediction: The Next Phase of Amazon’s Growth Could Be Its Most Profitable Yet
AWS is growing faster and minting higher margins than almost any business Amazon has ever built, yet the stock sits well below what that trajectory implies. Here is why the gap between today's price and where this goes next may…
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Amazon (NASDAQ:AMZN | AMZN Price Prediction) is heading into a period where its highest-margin business is also its fastest-growing one. Our 24/7 Wall St. price target for Amazon is $327.14. That means 30.92% upside from the model’s reference price of $249.87, and the model rates the stock a buy.
24/7 Wall St. Price Target Summary
| Metric | Value |
|---|---|
| Current Price | $249.87 |
| 24/7 Wall St. Price Target | $327.14 |
| Upside/Downside | 30.92% |
| Recommendation | BUY |
| Confidence Level | 70% |
AWS grew 37% last quarter at a 39.4% operating margin. That profit engine is the core of our thesis.
AWS Is Speeding Up, and the Stock Price Hasn’t Caught Up
Amazon trades at $250.72 intraday Friday. The stock is down 0.19% for the week and 3.96% for the month, but up 8.62% year to date. That leaves it between a 52-week high of $287.2 and a low of $196. Recent filings also showed that President Trump’s July trades included sales of Amazon stock (CNBC).
In the Q2 report, revenue rose 19.6% to $200.61 billion, beating estimates by 2.12%. Operating income jumped 43.2% to $27.46 billion. GAAP EPS was $5.75, but that figure includes a one-time pre-tax gain of $53.4 billion on Amazon’s Anthropic stake. Guidance calls for Q3 operating income of $22.5 billion to $26.5 billion, compared with $17.4 billion a year ago.
Why Bulls See $376 Ahead
AWS has a backlog of $496 billion and an annualized revenue run rate of $169 billion. AI and chips each top $25 billion in run rate. Anthropic committed to 5 GW of Amazon’s Trainium chips. Advertising grew 26%.
Andy Jassy said AWS could “very possibly be a trillion dollar annual revenue business for us in time.” 59 analysts have bullish or highly bullish ratings on the stock. If the optimistic case plays out, the model projects the stock reaching $376.29.
Capex and Cash Flow Could Hold Back the Upside
Capex rose 68.4% to $54.21 billion in Q2, and trailing free cash flow turned negative at $7.6 billion. Long-term debt climbed to $119.1 billion from $65.6 billion.
Operating cash flow rose 39.6%, and management says servers take “a little less than three years to break even.” Even the low estimate of $281.92 is above today’s price.
Amazon vs. Microsoft and Alphabet: Who Earns More From AI?
Microsoft (NASDAQ:MSFT) is relevant because Azure competes with AWS for enterprise AI spending. Azure grew 43%, and Microsoft generated $66,987,000,000 in free cash flow for the fiscal year.
Alphabet (NASDAQ:GOOGL) faces similar conditions: massive capex plus earnings inflated by investment gains. Google Cloud grew 82%, while Q2 free cash flow was negative $5,855,000,000.
| Company | Trailing P/E | Operating Margin |
|---|---|---|
| Amazon | 20 | 11.16% |
| Microsoft | 28 | 46.78% |
| Alphabet | 15 | 32.06% |
Amazon’s company-wide margin is lowest because retail dominates its sales. AWS alone makes margins comparable to peers. As AWS becomes a larger share of revenue, the gap should narrow, validating our target.
Amazon Price Prediction 2026-2030
Our $327.14 target carries a buy rating at 70% confidence. AWS margins holding while growth speeds up tip the scale. The upside case has the edge if Q3 operating income comes in near guidance highs and capex stabilizes.
| Year | 24/7 Wall St. Price Target |
|---|---|
| 2026 | $263.14 |
| 2027 | $329.03 |
| 2028 | $405 |
| 2029 | $441.75 |
| 2030 | $493.24 |
The projections rest on Amazon carrying out its current strategy. Results depend on how quickly $200 billion in 2026 capex converts to free cash flow.
Contact [email protected] for any questions or corrections.
Vandita Jadeja is a financial publisher with over a decade of experience writing about financial topics, including investment, savings, retirement, insurance and banking. Vandita is a Chartered Accountant who loves to debunk financial concepts for readers.
Her work has appeared on sites that include The Motley Fool, InvestorPlace, and Benzinga. She covers investing and focuses on stock picks and price prediction for 24/7 Wall St.
When not looking for the next stock investment opportunity, she can be found traveling, reading, chasing sunsets and enjoying her iced latte.
