Bank of America expects AWS, Amazon’s cloud unit, to drive upside in third-quarter results from new capacity, price increases, AI lab contracts, and growing enterprise demand.
“Ultimately, we continue to believe the biggest drivers of the stock are expectations around the AI opportunity and returns on capex,” the company wrote in a note to clients. “The key risk is high expectations (possibly at 42%+), but results should suggest strong ROI on capacity capex.”
Risks include rising capital spending, 4Q cost pressure from higher gas prices, and soft Q3 ad revenue, which could fuel concerns about AI shopping agents.
The company maintains its Buy rating on Amazon with a $320 target ahead of earnings.