Amazon Shares Plunge Amid Bullish Predictions for AWS Growth

Amazon shares are trading lower on Monday despite positive news from Morgan Stanley and a prominent hedge fund manager. Analyst Brian Nowak maintained an Overweight rating on Amazon with a $335 price target, predicting that Amazon's cloud computing business, AWS, could reach $1 trillion in revenue by 2034 or 2035.

The key drivers of this growth are the company's ability to quickly bring new compute capacity online and its pricing power. Nowak assumes that AWS will add around 8 gigawatts of capacity annually from 2026 onwards, with each watt generating $12-$15 revenue per year.

This would result in $300 billion of operating profit for AWS alone by 2035, growing to over $500 billion company-wide. Using a 21-times earnings multiple and a 10% discount rate, Nowak estimates that Amazon's share price could reach around $500 by the end of 2027, representing nearly 100% upside from current levels.

Meanwhile, hedge fund manager Stanley Druckenmiller has increased his stake in Amazon by over 1,000%, with a total holding of 541,600 shares and more than double his call options on the stock. However, despite this positive news, Amazon's shares are under pressure alongside the broader market.