Amazon’s AWS expansion could drive potential revenue upside, analysts say

Core Viewpoint - Amazon's AWS is expected to experience revenue growth exceeding market expectations due to significant capacity expansion [2][3] Group 1: Capacity Expansion and Revenue Growth - AWS is projected to add approximately 15 gigawatts of capacity by 2027, leading to potential revenue growth of 27% in 2026 and 28% in 2027, surpassing market estimates [3] - Since 2022, AWS has more than doubled its power capacity, adding 3.9 gigawatts in 2025 alone, with plans to double capacity again by 2027 [3] Group 2: Financial Projections - Bank of America estimates that AWS could generate $164 billion in revenue in 2026 and $209 billion in 2027, indicating potential upside of 2% and 5% compared to consensus [4] Group 3: Competitive Positioning and Risks - Recent agreements with OpenAI and the US government position Amazon favorably for AI-related workloads [4] - While revenue yields may be affected by shifts to AI workloads and competitive pricing, favorable demand trends are expected to support revenues [5] - The unprecedented capacity build may elevate input costs and lead to more competitive pricing, potentially pressuring industry revenues [6] Group 4: Investment Outlook - Despite identified risks, Bank of America maintains a Buy rating on Amazon shares, citing accelerating AWS growth, adoption of Amazon's Trainium chips, and new AI deals as potential catalysts [6] - A price target of $275 has been set, above the current levels of approximately $209 [7]