Amazon.com, Inc. (NASDAQ:AMZN) is among the AI Shares Each Investor Ought to Watch. On September 24, Wells Fargo analyst Ken Gawrelski upgraded the inventory from Equal Weight to Chubby with a worth goal of $280.00 (from $245.00).
The agency has stronger conviction in AWS income acceleration in 2026 pushed by Challenge Rainier capability additions and peak share losses in 2025.
Gawrelski famous how Challenge Rainier is a devoted AWS knowledge middle for Anthropic compute in Indiana. It’s anticipated to start out coming on-line in January 2026. His staff has estimated that the ability will contribute an estimated $14B annual AWS income at full capability of two.2GW.
Though AWS market share will preserve declining, progress ought to decide up tempo once more because the broader cloud business expands.
Some dangers highlighted by the agency embody execution challenges with Rainier, Trainium chip efficiency, sluggish core workload demand, and AI-related margin stress.
“Upgrading AMZN to OW (from EW) on higher conviction in AWS acceleration in ’26. Elevating AWS progress to +22% from prior/consensus of +19%/+18%. We see Challenge Rainier, a major compute capability construct w/ associate Anthropic, as the first driver of acceleration, contributing 5%/4% to AWS progress in ’26/’27. See construct in our companion cloud business be aware. We view AWS income acceleration as the important thing to the reversal of share underperformance YTD (flat vs. NDQ +17%). Growing our 2026 / 2027 AWS income estimates by 3% / 7% as we see Challenge Rainier capability additions beginning in early 2026 supporting incremental Anthropic compute. Anticipate Challenge Rainier Part 1 (1.3GW) to return on-line in Jan ’26 w/ 6-month utilization ramp and Part 2 to start out coming on-line in 4Q26. We estimate Indiana campus at full capability (2.2GW) contributes ~$14B annual revenues to AWS. We forecast Anthropic contributes 7 factors to AWS 2026 income progress (vs 3 factors in 2025). See AWS market share losses peaking in 2025 (-470bps y/y), bettering in 2026 and past as AWS accelerates, assuaging aggressive considerations. Whereas share losses stay materials, we take solace in stronger business progress and rising AWS estimates. Challenge AWS share losses modestly enhance to -420bps y/y in 2026, -260bps y/y in 2027 and -180bps y/y in 2028. By 2029, see AWS at 32% share, down from 47% in 2024. Nevertheless, over that interval, see cloud business 31% CAGR to $870B from $230B in 2024. Dangers to our name embody execution of scaling Challenge Rainier, efficiency of Trainium chips, additional deceleration of core (non-AI) workloads, and higher AI-related margin headwinds than anticipated. See operational execution of Challenge Rainier (and knowledge middle capability extra broadly) as key danger given ongoing provide constraints and uncertainty round giant Trainium deployments. We assume AWS OI margin compression of 270bps / 180bps y/y in 2026 / 2027 tied to scaling AI deployments.”