Amazon.com (AMZN) is showing improving momentum in its cloud business across multiple fronts, driven by gains in capacity, proprietary chips and rising AI-related demand, with growth in Amazon Web Services accelerating, BofA Securities said in a Thursday note.
AWS revenue growth accelerated to 28% year over year in Q1, driven by strong demand for AI workloads and core services, alongside rising backlog and early large AI contract wins. The backlog increased by about $120 million quarter over quarter, including roughly $100 million from Anthropic expected in Q2, while Trainium chip commitments exceeded $225 billion.
BofA increased its Q2 revenue forecast to about $198 billion from roughly $189 billion, citing AWS strength and a Prime Day timing benefit. The firm also raised its operating profit estimate to about $23.9 billion from $22.9 billion previously.
The investment firm also raised its longer-term outlook. It lifted its 2026 revenue and operating profit projections on stronger cloud momentum and improved retail performance. It raised its 2027 estimates to about $949 billion in revenue, $130 billion in operating profit and $9.92 in earnings per share.
BofA reiterated its buy rating on the stock and raised its price objective to $310 from $298.
Shares of Amazon were down 1.3% in Thursday trading.
Price: $259.65, Change: $-3.39, Percent Change: -1.29%