Morgan Stanley Predicts Amazon Stock Could Double as AWS Reaches for $1 Trillion

Morgan Stanley analyst Brian Nowak thinks Amazon's stock could double by the end of next year. His reasoning is based on the company's cloud computing business, Amazon Web Services (AWS), which is expected to grow significantly in the coming years.

AWS currently generates about $170 billion in annualized sales. To reach a revenue milestone of $1 trillion, the company would need to increase its sales by almost six times. However, Nowak believes that AWS could potentially reach this target within eight to 10 years.

The analyst also estimates that Amazon's overall earnings before interest and taxes (EBIT) could reach $500 billion over the same period. He bases this estimate on continued growth in cloud infrastructure, rising demand for artificial intelligence (AI), and better monetization of computing capacity.

AWS's ability to add new data-center capacity is crucial to its growth prospects. Nowak estimates that Amazon will add 6 gigawatts of capacity in 2026 and another 8 gigawatts in 2027. He also believes that the company could continue adding roughly 8 gigawatts annually after that.

While AWS's growth trajectory is uncertain, Morgan Stanley has already raised its price target for Amazon to $335 from $330 following the company's second-quarter earnings. The revised target represents a 28% upside from Amazon's recent share price of around $261.