Amazon (AMZN) Gains as Jassy Forecasts 40%-Plus AWS Growth for 2027 and 2028
Key Takeaways
- •Amazon's third-quarter earnings per share of $1.89 missed the $1.97 analyst consensus, and revenue of $201.94 billion came in just under the $202.22 billion estimate despite growing 12.1% year over year.
- •AWS posted record revenue of $45.9 billion, up 39%, marking its sixth consecutive quarter of accelerating growth, and ended the quarter with $578 billion in contracted orders waiting on data center capacity.
- •CEO Andy Jassy said AWS could grow more than 40% in both 2027 and 2028 and pointed to a path toward $1 trillion in annual revenue within five to 10 years.
- •Amazon expects to direct about $220 billion into data center buildout in 2026, and its first three quarters included more than $68 billion in non-operating profit, largely unrealized paper gains on its Anthropic stake.
- •Commitments for Amazon's Graviton and Trainium chips rose twentyfold from a year earlier, and analyst sentiment remains constructive, with a MarketBeat consensus of Moderate Buy and an average price target of $321.02.
Shares of Amazon.com, Inc. (NASDAQ: AMZN) closed at $250.69 on Tuesday, up 2.06% on the day. The gain followed a pullback that had left the stock down 15% from its August record high as of last Friday's close, after the company reported mixed headline results for the third quarter on Oct. 29.
For the quarter, Amazon reported earnings per share of $1.89, missing the $1.97 consensus among analysts. Revenue came in at $201.94 billion, just under the $202.22 billion estimate, although the figure still represented 12.1% growth from a year earlier.
The cloud unit told a different story. AWS revenue hit a record $45.9 billion, up 39%, marking the sixth consecutive quarter of accelerating growth for the segment. AWS is now running at an annualized pace of $184 billion, and it competes with Microsoft's Azure and Google Cloud in the cloud infrastructure market.
Jassy Points to 40%-Plus Growth in 2027 and 2028
On the earnings call, CEO Andy Jassy said AWS could grow more than 40% in both 2027 and 2028, and pointed to a path toward $1 trillion in annual revenue within five to 10 years.
Amazon $AMZN CEO Andy Jassy expects AWS growth above 40% in both 2027 and 2028, and said: "There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years." pic.twitter.com/5GufGESthG
— Wall St Engine (@wallstengine) October 29, 2026 (source post)
The order backlog backs up that outlook. AWS ended the quarter with $578 billion in orders waiting on available data center capacity. Because that demand is already contracted and waiting on physical capacity rather than customer commitment, converting it into recognized revenue hinges on how quickly new data centers come online.
Custom chips are a central part of that story. Commitments for Amazon's Graviton and Trainium processors rose 20 times from a year earlier, and Amazon says they offer 30% to 40% better price performance. Custom silicon is a strategy the largest cloud operators use to manage computing costs at AI scale, and the plan to offer Trainium beyond AWS in late 2027 would put Amazon's processors in the broader AI hardware market alongside established suppliers such as Nvidia.
The Bedrock platform is growing fast as well. Fortune 500 spending on the service is up sevenfold, and token volume has increased 17 times. Bedrock offers more than 100 models from firms including OpenAI, Anthropic, Mistral AI and Meta Platforms, and Jassy called it the fastest-growing multibillion-dollar business in AWS history. Hosting models from rival developers under one roof lets AWS serve AI workloads whichever model a customer picks.
Spending and Cash Flow
On the spending side, Amazon expects to direct about $220 billion into data center buildout in 2026, with additional outlays planned for 2027. Reports also cited a $34.8 billion free-cash-flow outflow and an $80 billion supplier financing plan tied to the expansion. At that scale, the pace of capacity additions and the trajectory of free cash flow are figures to track in upcoming quarterly reports.
Jassy said the investments should bring higher returns and more free cash flow than he had imagined. Because data centers have long useful lives, the costs of the buildout weigh on earnings over several years.
The earnings picture carries a twist. Across the first three quarters of the year, Amazon booked more than $68 billion in non-operating profit, most of it paper gains on its stake in Anthropic. Those gains are unrealized, so they do not represent cash from operations and can move with the value of the stake.
Analysts see 2027 earnings of $10.58 per share. The trailing price-to-earnings ratio is 19.4, and the forward ratio stands at 22.8.
Institutional Activity and Analyst Ratings
Sterling Manor Financial opened a new Amazon position worth about $830,000 in the third quarter, according to an SEC filing. Institutions own 72.20% of the stock.
Among recent analyst moves, Freedom Broker lifted its price target to $330, while Phillip Securities upgraded the stock to Strong Buy. Rosenblatt maintained a buy rating with a $360 target, and MarketBeat's consensus rating stands at Moderate Buy, with an average price target of $321.02.
