Key Takeaways
- Amazon shares jumped 5% today after Phillip Securities upgraded the stock to Buy with a $330 price target.
- The upgrade looks right: AWS grew 39% last quarter, and the stock trades at its lowest forward P/E in five years.
- The worry is cash: Amazon, Alphabet and Meta all spent more than their operations brought in last quarter.
- Nvidia stands to gain from the heavier spending, and Amazon’s 2027 capex outlook in February is the next test.
Amazon (AMZN) stock jumped 5% today after Phillip Securities upgraded it to Buy with a $330 price target.
Investors sold it off on Friday over AI spending that outran its cash, as it did at Alphabet (GOOG) and Meta Platforms (META). Plenty of that spending ends up at Nvidia (NVDA).
Phillip sees the demand behind the spending
Phillip analyst Helena Wang pointed to Amazon’s demand visibility.
AWS revenue grew 39% to $46.0 billion last quarter, and its backlog reached $578 billion. CEO Andy Jassy also projected AWS growth above 40% in both 2027 and 2028.
Analysts expect normalized EPS to dip in 2027, then climb to $13.93 in 2028.
Capex outran the cash
Amazon’s capital spending has nearly tripled since late 2024. It reached $77.3 billion in the September quarter, far more than its operations brought in.
That left free cash flow at a $42.4 billion outflow over the past twelve months. And Jassy said Amazon expects to “spend meaningfully more in 2027.”
Alphabet and Meta have the same problem. Alphabet’s free cash flow was a $9.07 billion outflow last quarter, and Meta’s was a $2.12 billion outflow. Analysts expect Meta’s normalized EPS to climb 19% in 2027, while they see Alphabet’s falling. If Phillip’s demand case holds, Meta looks like the better bet of the two.
Nvidia sits on the other side of the bill: its data center revenue grew 117% to $89.0 billion in the quarter ended July 26. But Amazon wants more of that spending going to its own Trainium chips.
TIKR tracks 60 analysts on Amazon. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Amazon, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Amazon’s Analyst Ratings
Amazon hasn’t been this cheap in five years
Amazon’s forward P/E fell to 24x at Friday’s close, its lowest in five years and less than half its five-year average of 49x.
Phillip’s $330 target is about 30x analysts’ 2027 estimate, still far below that average.
I think Phillip has this one right. AWS keeps speeding up, and Amazon doesn’t need to get anywhere near its old multiple to reach $330.
Of course, if Amazon guides 2027 capex far higher in February, a return to positive free cash flow moves further out.
So what is Amazon stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Amazon could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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