Bank of America expects AWS, Amazon’s cloud unit, to deliver higher third-quarter earnings thanks to new capacity, price increases, AI lab contracts and growing enterprise demand.
“Ultimately, we continue to believe that the primary drivers of the stock are expectations for AI-related opportunities and investment returns,” the company wrote in a note to clients. “The main risk is high expectations (perhaps above 42%), but the results should suggest a strong ROI on capacity investments.”
Risks include increased capital spending, cost pressure in the fourth quarter from rising gasoline prices and weak advertising revenue in the third quarter, which could fuel concerns about AI purchasing agents.
The company maintains its Buy rating on Amazon with a target of $320 ahead of earnings.
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