Morgan Stanley Projects $355 Billion in Amazon Capital Spending for 2027

Morgan Stanley projects Amazon will spend $355 billion on capital projects in 2027 and $365 billion in 2028, putting greater weight on whether cloud and AI growth can support the investment.

The figures are spending forecasts, not commitments by Amazon. Expanding AI infrastructure requires investment in computing equipment and data centers, while the effect of that spending on revenue, profit and cash flow remains a focus for investors.

Morgan Stanley also raised its Amazon price target to $350 from $335, maintained its overweight rating and named the company one of its top picks. Its projections include faster growth at Amazon Web Services (AWS), the company’s cloud business.

The bank now projects AWS revenue growth of 47% in 2027, up from its earlier forecast of 41%. It raised its 2028 growth forecast to 42% from 37%. Those increases place more weight on AWS as Amazon expands the infrastructure used to deliver AI services.

Morgan Stanley projects AWS operating margins of 42% in 2027 and 44% in 2028. It estimates Amazon could earn about $16.50 per share in 2028. The bank’s projections depend in part on how growth in the cloud business translates into earnings as capital spending rises.

The outlook also includes potential growth from Bedrock, which lets businesses use and deploy AI models through AWS. AI shopping agents are another potential opportunity: Such tools can help shoppers search for, compare and purchase products. Their contribution to Amazon’s business remains a projection.

Fulfillment automation offers a separate potential source of savings. Morgan Stanley estimates that, for each 10% of Amazon’s global merchandise shipments handled by fulfillment centers using robots, annual costs could fall by $2 billion to $4 billion. The amount would depend on deployment progress, equipment investment and operating conditions at the centers.

Morgan Stanley’s price scenarios range from $220 in its bearish case to $410 in its bullish case, reflecting uncertainty around cloud growth, AI services and operating efficiency.

Amazon is expected to report third-quarter results Oct. 29. AWS growth, AI-related revenue and the effect of capital spending on profit and cash flow will be among the figures investors can assess then.