Amazon pickup & returns building by Bryan Angelo via Unsplash Large-cap tech stocks have rebounded strongly from their April lows as easing tariff concerns and a more stable macroeconomic outlook reignite investor confidence. Among these giants, e-commerce and cloud titan Amazon (AMZN) continues to attract bullish sentiment, with analysts reaffirming its long-term growth potential.
Morgan Stanley’s senior analyst Brian Nowak recently reiterated Amazon as his “top pick,” raising the stock’s price target to $300 from $250, a 20% upward revision. In an accompanying research note, the firm cited a “more manageable tariff and geopolitical backdrop” alongside improving macro conditions as key reasons for its renewed optimism on AMZN stock.
More News from Barchart
-
This Penny Stock Wants to Become the MicroStrategy of Dogecoin
-
Opendoor Stock Is Surging Higher in a Frenzied Retail Rally. How Should You Play OPEN Shares Here?
-
Robinhood Stock Stumbles as S&P 500 Inclusion Is Once Again Off the Table for HOOD
-
Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now!
In short, the easing of trade tensions and brighter global growth prospects have allowed Morgan Stanley to discard previous worst-case scenarios, such as steep China tariffs, and upgrade its earnings outlook. Crucially, the firm also pointed to accelerating momentum in Amazon Web Services (AWS), fueled by rising demand for artificial intelligence (AI) and cloud-based solutions.
With that in mind, let’s take a closer look at the specific areas Morgan Stanley believes will drive Amazon’s next phase of growth.
About Amazon Stock
Headquartered in Seattle, Amazon is an e-commerce behemoth that's engaged in online retail, cloud computing, digital streaming, and AI businesses. The company is also a major force in cloud services through its AWS division, which offers on-demand solutions such as computing power, storage, databases, and machine learning tools.
Although Amazon stock has rebounded from its April lows, its performance remains relatively slow, gaining just 4.5% year to date, compared with the S&P 500 Index’s ($SPX) 7.3% advance over the same time frame.
www.barchart.com In terms of valuation, AMZN appears relatively expensive. Its price-to-sales ratio of 3.64 is well above the sector median of 0.98, indicating that investors are paying a premium. However, its price/earnings-to-growth (PEG) ratio of 0.51 points to potential undervaluation relative to its expected bottom-line growth, especially when compared to the sector average PEG of 0.78.
Story ContinuesEasing Tariffs and Improving Macro Outlook
Morgan Stanley restored its 2026 EPS forecast for Amazon to $8, citing a “significantly improved” macroeconomic outlook since mid‑April.
The firm also raised its 2027 forecast, effectively reversing earlier cuts that had factored in potential punitive tariffs on Chinese imports. Morgan Stanley’s team now judges the likelihood of extreme tariff measures disrupting Amazon’s growth as “much lower,” and views easing trade tensions as a catalyst for smoother execution across the retailer’s core businesses.
Tariff concerns weighed heavily on online retail earlier this year, but the latest note describes current pressures as “manageable.” Unlike some peers, says the firm, Amazon can mitigate cost headwinds by diversifying its supply chain and fine‑tuning pricing strategies. Morgan Stanley specifically points to the improving tariff environment as a key driver behind its more optimistic outlook.
AWS and AI Growth Catalysts
A second pillar of Morgan Stanley’s bullish view is Amazon’s cloud and AI businesses. The firm wrote of an “increased conviction in AWS acceleration” driven by the generative AI wave. Indeed, AWS has been Amazon’s biggest profit engine, and it has only become more strategically vital as companies race to adopt AI tools. Notably, Amazon in Q1 announced new generative AI offerings on its Bedrock platform; for example, hosting Anthropic’s Claude 3.7 Sonnet and Meta’s (META) Llama 4 models for customers.
Morgan Stanley highlighted partnerships like the one with AI startup Anthropic as concrete evidence of AWS’s upside. It also cited the competitive cloud landscape, which includes Microsoft (MSFT) Azure’s own AI push, as a validation of Amazon’s strategy.
Amazon’s recent investment in AI infrastructure even includes custom hardware, as it revealed a specialized In-Row Heat Exchanger cooling system for Nvidia’s (NVDA) latest AI chips, underscoring the mega-cap company's commitment to supporting compute-intensive workloads.
Amazon Smashes Q1 Earnings
Amazon’s Q1 2025 results showed the business performing solidly, as Amazon reported net sales of $155.7 billion, which is up 9% from a year ago. All of Amazon’s segments grew: North America retail revenue rose 8% to $92.9 billion; international revenue rose about 5% (8% excluding forex) to $33.5 billion; and AWS sales jumped 17% to $29.3 billion. The surge in AWS revenue was a key profit driver: AWS operating income in Q1 reached $11.5 billion, up from $9.4 billion a year ago.
On the profitability front, net income soared to $17.1 billion, or $1.59 per share, from $10.4 billion ($0.98) in Q1 2024. That represents a huge step up in profit, even as the company continued to invest aggressively in new technology and logistics. However, AMZN slipped after earnings in response to a soft forecast.
Looking ahead, investors will closely watch Amazon’s Q2 results (due out after the close on July 31) for signs of resilience. The consensus projection is roughly $159–164 billion in sales with earnings around $1.30–$1.50 per share, but Morgan Stanley’s call for easier tariffs and strong AWS momentum could help Amazon beat those estimates.
What Does Wall Street Think About AMZN Stock?
Backing Morgan Stanley’s view, Wall Street analysts also remain bullish on Amazon's growth prospects. Among 54 analysts covering the stock, the consensus rating is “Strong Buy,” with 47 assigning a “Strong Buy,” six recommending a “Moderate Buy,” and only one maintaining a “Hold” rating.
This bullish group has set an average price target of $249.85 for Amazon, implying a potential upside of about 9% from Monday's closing price.
www.barchart.com On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
