Why Amazon's lagging stock now may offer the perfect buying opportunity

By Christine Ji

Amazon's stock has been weighed down by concerns about AWS growth, but Wells Fargo sees better trends ahead for the company's cloud-computing business

Wells Fargo analyst Ken Gawrelski predicts that Anthropic will contribute 7 points to AWS revenue growth in 2026.

Amazon.com Inc.'s flat performance this year signals that many on Wall Street have soured on the company's outlook, but Wells Fargo analyst Ken Gawrelski is seeing a chance to get an artificial-intelligence winner for cheap.

On Wednesday, Gawrelski upgraded Amazon's stock (AMZN) to overweight while lifting his price target to $280. Previously, Wells Fargo had rated the stock at equal weight with a price target of $245.

The upgrade comes after Amazon on Tuesday became the worst-performing "Magnificent Seven" name in the year to date. The stock finished that session at $220.71, up just 0.6% since the beginning of the year, largely due to concerns that the Amazon Web Services business is losing market share in the cloud-computing industry to competitors like Microsoft Corp. (MSFT) and Alphabet Inc. (GOOGL) (GOOG).

Also read: Amazon's stock is now Big Tech's biggest loser in 2025 as the cloud race heats up

In a surprise to investors, AWS might actually be "the key to the reversal of share underperformance," according to Gawrelski, as Amazon's cloud-computing business reaccelerates thanks its partnership with Anthropic. Wells Fargo projects that Anthropic will add 7 points to AWS revenue growth in 2026, up from 3 points in 2025. Gawrelski now expects AWS revenue growth of 22.1% in 2026 and 23.5% in 2027, up from prior estimates of 19.3% and 19%, respectively.

"Capacity additions, most notably Project Rainier, will drive AWS revenue growth acceleration through 2026," Gawrelski wrote.

Project Rainier, a massive build-out of computing capacity specifically to support Anthropic, is anticipated to begin coming online in early 2026 and to drive AWS margins materially higher, Gawrelski wrote. The project consists of a supercluster of Amazon's custom Trainium2 AI chips deployed across multiple data centers. Amazon is building an $11 billion data center in Indiana that will bring 2.2 gigawatts of capacity online and will contribute roughly $14 billion in annual revenues to AWS once fully online, according to Gawrelski.

This development is critical to the growth of AWS, as Amazon Chief Executive Andy Jassy has cited capacity constraints as a limiting factor for the business. The issue stems from a surge in AI training and inferencing workloads, which has created a scramble for scarce resources such as chips and networking infrastructure.

On Amazon's July earnings call, the company reported AWS revenue growth of 17.5%, which failed to impress investors given its dominant position in the cloud-computing industry. If Gawrelski's fresh AWS predictions do indeed come into fruition, that would be a positive surprise and a signal to investors that Amazon is continuing to stay competitive as the AI boom fundamentally reshapes the cloud landscape.

Consensus estimates tracked by FactSet currently anticipate AWS revenue growth of 18.8% in 2026, significantly below Gawrelski's 22.1% growth rate.

-Christine Ji

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09-24-25 0956ET