Amazon (AMZN) shares climbed on Monday after Morgan Stanley raised its price target on the e-commerce and cloud group, citing stronger cloud growth and expanding uses for artificial intelligence. AMZN stock gained about 2% after ending Friday's session at $250.

Analyst Brian Nowak lifted his target to $350 from $335 and maintained an Overweight rating on the shares. The new target represents roughly 40% upside from Friday's close. Morgan Stanley also named Amazon a top pick, a designation analysts use for their preferred ideas. The bank's lower and upper share-price scenarios stand at $220 and $410, respectively. Such targets are analyst estimates and can vary across Wall Street.

AWS Growth Forecast Rises

Morgan Stanley now expects Amazon Web Services revenue to grow 47% in 2027 and 42% in 2028, up from its previous projections of 41% and 37%. AWS, Amazon's cloud computing unit, sells computing power, storage, and related services to businesses. The revised forecasts account for purchases of new servers and data-centre equipment.

Nowak expects greater demand for computing power as companies build AI products. His forecast follows Nvidia's projection that AWS will deploy about two million GPUs over 2027 and 2028. GPUs are the processors widely used to train and run AI models. Separately, Nvidia expanded its Nemotron AI models last week, adding tools for developers working with AI.

Amazon's Bedrock service also forms part of the outlook. The offering gives businesses access to AI models for developing applications. Morgan Stanley expects AWS operating margins to reach 42% in 2027.

AI Shopping Faces New Competition

Morgan Stanley also expects Amazon to benefit from shopping tools that use AI to search for products and complete tasks. Nowak pointed to the company's delivery network and customer relationships as advantages.

Competition in the space is building, however. Meta is also developing AI tools; recent coverage of Meta's Muse Spark Open launch described a model for coding and automated tasks. Nowak said holiday shopping could test new consumer AI shopping agents. The year-end holiday period is among the busiest shopping stretches for retailers.

Robotics Could Lower Delivery Costs

Warehouse automation forms another part of Morgan Stanley's forecast. According to the analyst's report, Amazon plans additional robotic fulfilment facilities and upgrades to existing sites during 2027. Fulfilment centres handle the picking, packing, and shipping of online orders.

The bank estimates that moving another 10% of global orders through robotic facilities could save $2 billion to $4 billion annually. Those savings depend on how widely Amazon adopts the technology.

AMZN Stock Rebounds Before Earnings

Amazon shares gained after losing 4.7% last week amid a broader technology sell-off. Earlier coverage of Amazon's Friday stock decline recorded a close of $250. The shares remain about 12% below their August 3 closing price of $284.02.

Wall Street sentiment remains largely bullish. LSEG data show 62 of 64 covering analysts rate the stock Buy or Strong Buy. Amazon plans to release quarterly earnings on October 29; its quarterly reports include segment results for AWS.