Amazon Stock Is the Mag 7’s Worst Performer. Why an Analyst Says It’s Time to Buy.

Amazon’s cloud-computing arm is losing market share but could see revenue growth accelerate, say analysts at Wells Fargo. (Getty Images for Amazon Web Services)

Key Points

About This Summary

• Wells Fargo upgrades Amazon to Overweight with a $280 price target, citing anticipated revenue growth acceleration for AWS.
• Amazon Web Services’ growth is projected to accelerate to 22% in 2026 from 19% in 2025, driven by AI investments.
• Project Rainier, an AI supercomputer using Trainium chips, is expected to contribute $14 billion in annual revenue at full capacity.

Amazon.com has underperformed the market this year, but that trend is set to reverse, according to analysts at Wells Fargo.

The firm upgraded Amazon to Overweight from Equal Weight and boosted its price target to $280 from $245 in a research note Wednesday. Amazon Web Services, the company’s cloud-computing arm, is building up artificial-intelligence capacity and should see revenue growth accelerate, Wells Fargo argued.

Amazon shares were climbing 0.2% to $221.15 in Wednesday trading. The stock closed Tuesday up less than 1% in 2025, making it the worst performer in the Magnificent Seven .

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Amazon Web Services, or AWS, has hemorrhaged cloud-computing market share this year, and those losses may continue. Wells Fargo forecast AWS’s share to drop to 32% by 2029, down from 47% in 2024. But that trend may say more about the growth and competitiveness of the cloud market than about Amazon’s own story.

“While share losses remain material, we take solace in stronger industry growth and rising AWS estimates,” wrote Wells Fargo’s Ken Gawrelski.

Amazon’s Project Rainier is the crucial piece of the firm’s thesis. As part of the project, AWS is developing an AI supercomputer using its in-house Trainium chips, as The Wall Street Journal reported last year. The AI startup Anthropic, which Amazon backed with another $4 billion investment last November, will use the chip cluster.

Wells Fargo expects the first 1.3 gigawatts of computing capacity to come online at Amazon’s data-center campus in Indiana in January, with an additional 0.9 gigawatts ramping later on. The site will contribute $14 billion in annual revenue at full capacity, Wells Fargo estimates. As a result, AWS growth should accelerate to 22% in 2026, the firm forecast, up from 19% in 2025.

Scaling Project Rainier and deploying the Trainium chips isn’t a slam dunk, of course. Amazon’s core retail business also needs to continue growing at a healthy clip, Wells Fargo added. But the firm has “increased conviction” in the AWS growth story, and that’s enough to make Amazon a solid bet.

Most on Wall Street agree with Wells Fargo’s assessment. Of the 71 analysts polled by FactSet, 68 rate Amazon stock a Buy or equivalent, with an average price target of $264.

Write to Nate Wolf at nate.wolf@barrons.com