Is Amazon Underestimated? Analyst Shares Reason Why AWS Is Doubling Down On Gigawatts During AI Skirmish

Core Viewpoint - BofA Securities analyst Justin Post maintains a Buy rating on Amazon.com Inc with a price target of $275, emphasizing that the aggressive capacity expansion of Amazon Web Services (AWS) could lead to significant upside despite short-term concerns regarding AI spending [1]. AWS Capacity Expansion - AWS has doubled its power capacity since 2022 and is set to add 3.9 gigawatts in 2025, including 1.2 gigawatts in Q4 [1]. - Amazon plans to double AWS capacity again by 2027, which is expected to accelerate AWS revenue growth from 17% year-over-year in Q2 2025 to 24% in Q4 2025 [2]. Revenue Projections - AWS power capacity is projected to exceed 31 gigawatts by the end of 2027, up from approximately 15 gigawatts in Q3 2025 [3]. - Assuming AWS generates about $5.4 billion in incremental revenue per added gigawatt, projected revenues for AWS are approximately $164 billion in 2026 and $209 billion in 2027, representing 2% and 5% upside compared to Street estimates of $161 billion and $199 billion, respectively [3]. Market Sentiment and Stock Performance - Despite a 6% decline in Amazon's stock since its fourth-quarter earnings, there is potential for improved sentiment if AWS growth re-accelerates, Trainium adoption increases, and more AI capacity deals are signed [5]. - As of the publication date, Amazon's stock was up 0.42% at $209.21 [5].