Amazon (AMZN) shares rose about 5% to $262.45 on Monday after Morgan Stanley’s Brian Nowak named the stock a top pick and raised his target to $350 from $335.
The call goes further than the Street on both sides of the ledger. Nowak’s 2028 earnings estimate sits 24% above consensus, and his 2027 capital spending forecast sits 28% above it. Morgan Stanley is betting that more spending turns into more profit, sooner.
What Morgan Stanley Is Betting On
- AWS growth: 47% in 2027 and 42% in 2028, up from 41% and 37%.
- The reason: Nvidia (NVDA) said on August 26 that AWS will deploy 2 million more of its GPUs across 2027 and 2028.
- AWS margins: 42% in 2027 and 44% in 2028, against 39.3% in the second quarter.
- The payoff: about $16.50 of EPS in 2028, with the $350 target at roughly 21 times that.
- The bill: capital spending of $355 billion in 2027 and $365 billion in 2028.
Testing Morgan Stanley Against Amazon’s Consensus
Consensus has Amazon earning $13.26 per share in 2028 on a normalized basis, up 60% from $8.31 this year. Nowak’s $16.50 is 24% higher than that.
The spending gap is wider. Consensus sees capital expenditure of $277.89 billion in 2027, so Nowak’s $355 billion adds another $77 billion in a single year. That lands where free cash flow is already the sore spot: consensus has it at negative $33.94 billion this year and negative $8.34 billion next year, before recovering to $37.85 billion in 2028. Even that recovery only gets back to 2024’s $38.22 billion.
The bull case needs AWS margins to climb while that much new equipment starts depreciating. Nowak is right that demand is there. The open part is whether profits keep pace with the depreciation.
What Amazon Stock Already Prices In
Not much excitement. Amazon trades at 28.85 times normalized NTM earnings, 41% below its five-year mean of 48.83 times and close to its 25.73 times low. At $262.45, the stock costs 19.8 times consensus 2028 earnings and 15.9 times Nowak’s.
Normalized is the right yardstick here. Amazon’s second-quarter EPS of $5.75 was boosted by $53.4 billion in non-operating pre-tax income, primarily from its Anthropic investment. Reported net income was $62.6 billion.
Where the Street Stands on AMZN Stock
The mean Street target is $331.72, 26.3% above Monday’s close. Morgan Stanley’s $350 sits 5.5% above that mean, and the high is $405. Forty-two analysts rate Amazon a buy and 16 an outperform, against two holds and no sells.
The Number Amazon Owes Investors on October 29
The upgrade is a bet on spending, not a call that the stock is cheap, and at under 29 times forward earnings the multiple leaves room for it. The test comes on October 29. AWS grew 37% last quarter at a 39.3% margin. If growth holds near that pace and the margin edges toward 42% even as 2026 spending lands near the $220 billion guide, Nowak’s 2028 math looks reachable. If the margin slips, consensus at $13.26 is the safer number.
Want to check the consensus path against Morgan Stanley’s yourself? Amazon’s EPS, capex and free cash flow estimates are free to pull up on TIKR. Learn more here.
So what is Amazon stock actually worth?
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
