Amazon Web Services Positioned to Propel Amazon Stock Growth in 2026, Analyst Predicts

As investor attention shifts toward the evolving potential of artificial intelligence implementations within cloud platforms, Amazon.com Inc. (NASDAQ: AMZN) finds itself under renewed scrutiny for its prospects heading into 2026. Notably, Bank of America Securities analyst Justin Post has restated his Buy recommendation on Amazon shares, with a price target set at $303. This outlook stems from a growing market perception that enhancements in the AI capabilities of Amazon Web Services (AWS) could serve as a pivotal growth engine, reversing some of the equity's prior lagging performance. Amazon's stock experienced a 5% appreciation throughout 2025, a figure trailing behind the broader market gains captured by the S&P 500 index, which increased by approximately 16%, and the Nasdaq composite’s 20% rise. These comparative underwhelming returns were partially attributed to concerns regarding AWS's competitive stance in the AI sector. While Amazon’s robust retail execution and the expansion of profit margins bolstered its financial footing, prevailing sentiment suggested AWS was not keeping pace with AI advancements, contributing to investor caution. In particular, skepticism about AWS's position in the artificial intelligence landscape exerted downward pressure on Amazon’s valuation multiples. The company’s forward enterprise value to EBITDA multiple saw a decrease in the order of 15% year over year, illustrating the market's apprehension. Looking forward, Post anticipates that AWS will experience accelerated growth in 2026. This optimism is grounded in the expansion of cloud infrastructure capacity and recent leadership adjustments at AWS. These strategic changes are expected to sharpen AWS's narrative around AI, enhancing differentiation in a highly competitive domain. Additionally, strong growth in usage of Rufus—a recently introduced tool or platform—within AWS is highlighted as a factor supporting a more autonomous future for Amazon's retail operations, potentially transforming how e-commerce is conducted with AI-driven agents. For long-term stakeholders, Post emphasizes that AWS's capacity to leverage proprietary technological advancements, including Amazon's work on large language models and the development of its custom Trainium chips, could become a significant competitive advantage. These advances might position AWS as a cost-efficient provider in the context of AI inference, a critical consideration as corporate clients increasingly prioritize operational efficiency and cost management within AI deployments. From a valuation perspective, Post notes that Amazon’s stock, hovering around $250, currently trades at roughly 11 times the projected 2027 EBITDA and 25 times the expected GAAP earnings per share. This positions Amazon's valuation modestly higher than Microsoft Corporation’s ratio of 23 times EPS but below companies like Alphabet Inc. (Google) and Walmart Inc., which trade at higher multiples reflecting differing growth expectations and business models. The relatively conservative multiples mirror the marketplace's lingering uncertainty concerning AWS's trajectory in AI and cloud services. Post ranks Amazon as his preferred large-cap internet stock for the 2026 calendar year, underscoring the multifaceted growth drivers supporting this position. These include anticipated acceleration in cloud services, the evolving AI offerings from AWS, a commanding retail presence poised to evolve with agentic e-commerce developments, and a projected profit growth exceeding 20%. Forecasting operational metrics, the analyst projects approximately 25% growth in GAAP operating income for Amazon in 2026. This is expected to be fueled by margin expansion within the retail segment—propelled by increased advertising revenues, improved inbound logistics efficiencies, adoption of robotics, and leveraging of existing workforce capacity. Revenue projections for 2026 estimate a 12% year-over-year increase, reaching $801 billion, slightly above Street consensus estimates, which foresee 11% growth to $796 billion. Similarly, EPS forecasts anticipate GAAP earnings of $7.75 per share, marginally below the Street median figure of $7.93. Within the AWS segment, a revenue estimate of $156 billion edges out the Street's $155 billion target, indicating confidence in cloud services' contributions to overall growth. At the time of reporting, Amazon's stock price was approximately $247.89, reflecting minimal daily change. This stability contrasts with broader market movements and provides a context for evaluating the company's growth initiatives and investor sentiment ahead of 2026. In conclusion, the interplay of AI innovation within AWS, expanding cloud infrastructure, and strong retail fundamentals underpin a cautiously optimistic scenario for Amazon’s stock performance next year. Investors and market watchers will be closely monitoring how the company executes on these fronts and translates technological advancements into financial outcomes in a competitive digital economy.