Amazon's AWS Growth Powers $500 Stock Target

Amazon's stock price has been largely steady at around $260.98 after Morgan Stanley painted a bullish picture for the company, predicting it could reach $500 per share. This would represent a significant jump of 92% from current levels.

The key to this scenario is Amazon Web Services (AWS), which generated $42.2 billion in revenue last quarter, up 37% year over year. AWS' growth has been driven by its increasing adoption in the AI era, and Morgan Stanley believes it could become a near trillion-dollar annual revenue machine.

However, investors are still waiting to see whether this growth will translate into durable profits for Amazon. The company's GF Value estimate suggests that its stock price is only about 6% above its estimated value, implying that the market has not yet fully priced in the AI opportunity.