Amazon (AMZN) continues to draw attention around the future of its cloud business, especially as investors debate whether AWS growth is slowing. Some believe recent trends point to a more mature phase for the business. But Wells Fargo analyst Ken Gawrelski sees things differently.
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In a new report, Gawrelski reiterated his Overweight rating on the stock and raised his price target to $295 from $292, noting that AWS may be on the verge of a new growth cycle. The new price target implies an upside potential of 26%. The analyst believes that AWS may be entering a new growth phase, and if current cloud supply constraints continue, Amazon’s plan to expand AWS capacity could support multi-quarter revenue acceleration.
A Massive AWS Expansion Is Underway
Gawrelski pointed to recent comments from Amazon’s management showing AWS plans to double its computing capacity by 2027. If that happens, he estimates the added build-out could support up to $150 billion in extra yearly revenue once fully used.
He explained that the new capacity will include three types of compute power. About 3.5GW will come from standard CPU servers. The other 8.5GW will come from AI chips, split between Amazon’s Trainium processors and Nvidia (NVDA) GPUs, with each type supplying roughly 4.25GW.
If the plan plays out as expected, total AWS capacity would grow from about 12GW in Q3 2025 to 24GW by late 2027, compared with around 6GW in 2022. Gawrelski called the expansion meaningful and said it “could drive material upside potential” for 2027 and 2028 earnings if demand continues at the current pace.
He added that AWS now appears to be entering a new spending phase as customers move more AI workloads to the cloud. While short-term growth may still depend on customer budgets, the analyst sees a solid long-term outlook if Amazon follows through on its expansion plans.
Is Amazon Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 43 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After an 11% rally in its share price over the past year, the average AMZN price target of $295.60 per share implies 26.39% upside potential.
