Wall Street Firm Names Amazon Its Top Pick With More Than 30% Upside. Is the Stock a Buy?

Morgan Stanley has selected Amazon as its top stock pick, projecting a $350 price target for the company's shares. Analyst Brian Nowak labels Amazon a "Rule of 90" firm, indicating its revenue growth and EBITDA margin could surpass 90%. Nowak identifies five potential catalysts to drive the stock's upward trajectory:

Firstly, Nowak anticipates a faster-than-expected acceleration in Amazon's cloud computing unit, AWS. He projects a 47% growth for AWS in 2027 and a 42% increase by 2028, following Nvidia's announcement that Amazon is expected to procure 2 million GPUs from Nvidia over the next two years. He expects AWS revenue to nearly triple from $128.7 billion in 2025 to $373.6 billion in 2028, with operating margins expanding to 42% in 2027 and 44% in 2028, leading to an adjusted EPS of $16.50 in 2028.

Secondly, Nowak believes increased visibility into Amazon's AI model service, Bedrock, could promote multiple expansion. On the e-commerce front, Morgan Stanley anticipates Amazon becoming an AI shopping leader and potentially forming a partnership with Meta Platforms and its Muse AI agent. Lastly, Nowak highlights Amazon's growing use of robotics, which could result in annual savings of $2 billion to $4 billion for every 10% of units processed through robot-powered fulfillment centers. He notes that Amazon's efficiency is expanding faster than initially expected.