Morgan Stanley Sees Path to $500 per Share as AWS Targets $1 Trillion Revenue

Morgan Stanley has increased its price target for Amazon to $335 from $330, representing roughly 27% upside from the current share price of $262.65. This comes after Amazon's Q2 earnings call, where management revised their estimate for AWS revenue from a few hundred billion dollars to at least $1 trillion.

Analyst Brian Nowak believes that if AWS can reach $1 trillion in annual revenue and maintain margins consistent with cloud computing history, there is a path to $500 per share by year-end 2027. This is not an official forecast but rather a valuation exercise based on capacity, monetization, and margin assumptions.

Nowak's model centers on how quickly Amazon can bring new compute capacity online, which he views as the main driver of AWS's future revenue growth. He assumes that AWS will add roughly 8 GW of capacity annually, with revenue generation increasing to $12 per watt from the current $8 per watt.

If this scenario plays out, Morgan Stanley expects AWS revenue to climb from approximately $176.9 billion in 2026 to about $249.2 billion in 2027, representing year-over-year growth of roughly 41%.

Working backward from a projected $300 billion of AWS operating profit and $500 billion company-wide profit, Nowak arrived at a 2027 year-end share price near $500, representing close to 100% upside from where Amazon trades today. This valuation multiple is still about 10% below the peer average of roughly 23 times.