Key Stats for Amazon Stock
- Current Price: $243.79
- Target Price (Mid): ~$570
- Street Target: ~$332
- Potential Total Return: ~133%
- Annualized IRR: ~23% / year
What Happened?
Amazon (AMZN) will start selling its Trainium AI chips outside Amazon Web Services in late 2027, CEO Andy Jassy said on the October 29 earnings call. The same evening, shares fell about 7% after hours: the third-quarter report missed on revenue and earnings per share, trailing free cash flow dropped to negative $42.4 billion, and fourth-quarter operating income guidance had a $31 billion midpoint, below the roughly $32.9 billion TIKR consensus.
Selling Chips Pays Sooner. Keeping Them Pays More
Jassy said “the number of companies who have a significant cloud business and a chip strong enough to sell externally is effectively 2.” He did not name the other one, though CNBC noted that Google already offers its TPU chips outside its own facilities.
Jassy said advanced chip designers all rely on the same manufacturer and each gets an allocation, so every Trainium chip is either sold or deployed in AWS. A sale books revenue as soon as the chip leaves inventory. Kept inside AWS, Jassy said, “you actually will end up driving more absolute revenue and free cash flow from those chips because you get to use them over 5 to 6 years.”
That makes the split a lever Amazon can pull each year, and Jassy said it would be revisited “probably every year.” With free cash flow negative and 2027 capex set to rise further, the option to pull some revenue forward could matter. It remains an announced plan: Jassy named no outside buyers or terms on the call.
Most of Bedrock Already Runs on Trainium
Inside AWS, the chip is already doing the work. AWS revenue grew 39.3% to $46.0 billion in the third quarter at a 38.7% operating margin, with a $578 billion backlog, and Jassy said “the majority and most of Bedrock,” Amazon’s AI inference service, runs on Trainium.
The call added more detail. Inference already accounts for well over half of AWS’s AI revenue. Revenue commitments for Trainium and Graviton each rose more than 20x year over year. Short-term capacity on prior-generation Trainium now sells at a premium to the first half of the year. Jassy also said neoclouds run about 3,500 basis points worse in operating margin than long-leased data centers, an edge Amazon pairs with chips it does not buy from a third party.
CFO Brian Olsavsky flagged the cost: “the outsized growth of AI puts margin pressure on the business as a whole because the margins are lower there.”
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
TIKR Advanced Model Analysis
- Current Price: $243.79
- Target Price (Mid): ~$570
- Potential Total Return: ~133%
- Annualized IRR: ~23% / year
The mid case, measured from the October 29 close and before the after-hours drop, rests on longer-range assumptions that run past 2030: about 13% annual revenue growth, a net margin near 16%, and a P/E easing about 2% a year. Jassy’s projection of above 40% AWS growth in both 2027 and 2028 is the main support for that path. External Trainium sales would add revenue on top of AWS rentals starting in late 2027. The risk is Olsavsky’s mix problem: lower-margin AI growth, plus capex that keeps outrunning operating cash flow, could hold margins below that path.
Conclusion
The first proof point is a named outside Trainium buyer with real terms before the late-2027 launch. Until then, AWS growth is the scoreboard: above 40% in 2027, as Jassy projects, would show that keeping most chips inside is paying off. Growth slipping back below the third quarter’s 39.3% would weaken both halves of the plan.
So what is Amazon stock actually worth?
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Disclaimer:
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 stocks mentioned. Thank you for reading, and happy investing!
