Financial analysts are turning increasingly bullish on Amazon’s prospects, with Wells Fargo identifying significant upside potential for the e-commerce and cloud giant. The optimism stems from a colossal, clearly defined infrastructure plan and a simultaneous aggressive push into rapid-delivery retail.
Unprecedented Cloud Infrastructure Expansion
At the core of the bullish thesis is Amazon Web Services’ (AWS) staggering growth blueprint. The cloud division plans to double its data center capacity from 12 gigawatts in Q3 2025 to 24 gigawatts by the end of 2027. In response to this announcement, Wells Fargo strategist Ken Gawrelski raised his price target on Amazon shares from $292 to $295, reiterating an “Overweight” rating.
The scale of investment is monumental, with Amazon committing approximately $270 billion to build out this future-ready infrastructure. The capacity expansion is strategically allocated: 3.5 gigawatts are earmarked for traditional CPU-based servers, while a dominant 8.5 gigawatts are reserved for AI-optimized hardware. This includes chips from Nvidia as well as Amazon’s proprietary Trainium processors. Wells Fargo’s analysis suggests this capacity doubling could generate an incremental $150 billion in annual revenue.
Notably, Amazon’s in-house silicon is gaining traction. Revenue from its Trainium 2 chips surged by 150% last quarter. The upcoming Trainium 3 generation, developed in collaboration with AI firm Anthropic, could further diminish the company’s reliance on external suppliers like Nvidia.
A Bold Move in Rapid Commerce
Concurrently, Amazon is launching a fresh assault on the retail front. Its new “Amazon Now” service promises delivery of groceries and household essentials in approximately 30 minutes, launching initially in Seattle and Philadelphia.
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This move directly challenges incumbents like Instacart and DoorDash. Prime members will pay a delivery fee of $3.99, while non-members face a charge of $13.99. The market reaction was swift: Instacart’s stock fell over 4% on the announcement day, with DoorDash shares also experiencing downward pressure.
This retail offensive appears part of a broader, margin-conscious strategy to defend market share. Amazon is deliberately accepting short-term margin compression to pressure low-cost rivals such as Shein and Temu, alongside quick-commerce players. A previously announced reduction of seller fees in Europe, effective December 15, aligns with this competitive posture.
Balancing Growth Ambitions with Scrutiny
While the analyst community remains overwhelmingly positive—with 95% recommending a “Buy” and price targets reaching as high as $360—internal challenges are emerging. More than 1,000 Amazon employees have signed an open letter expressing concern over the environmental impact of the massive data center build-out. The company’s carbon emissions increased by 6% in 2024, despite its “Net Zero” pledge.
For investors, a key question persists: Can Amazon manage this $270 billion capital expenditure without jeopardizing its free cash flow? Recent performance provides some assurance; AWS revenue grew at a year-over-year rate of 20.2%, a pace robust enough to potentially fund both expansion initiatives. Upcoming announcements at this week’s AWS re:Invent conference are expected to offer further clarity on the cloud division’s roadmap and financial trajectory.
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