Amazon Analysts Split on Price Targets as AWS Surge Collides With Cost Pressures
Published on 10/31/2026 at 01:10 | Editorial boerse-global.de
Wall Street's post-earnings verdict on Amazon is anything but uniform. Within a single trading session, two research houses moved their price targets in opposite directions — and neither budged on its rating. StoneX trimmed its target to $380 from $400 while keeping a Buy, and BMO Capital lifted its own to $390 from a prior level while sticking with Outperform. Cantor Fitzgerald, meanwhile, cut its target to $280 from $310 without changing its stance, according to media reports. The shares rose 4.6% on the day, though no causal link between the analyst actions and the move has been established.
At the heart of the divergence is Amazon's cloud unit. AWS lifted quarterly revenue 39% year over year to $46 billion in the third quarter of 2026, a figure BMO cites as the basis for its more bullish view. StoneX analyst Daniel Kurnos, by contrast, pointed to the outlook for free cash flow and expectations of heavier capital spending as reasons for his lower target.
A Profit Engine Under a Spending Cloud
The earnings report published a day earlier provides the backdrop. Amazon booked revenue of $201.9 billion in the third quarter of 2026 and diluted earnings per share of $1.89. Both figures fell short of expectations. Group operating profit came in at $28.1 billion, a margin of 13.9% — consolidated numbers that say nothing about the profitability of individual new AI projects, but which show the investment debate is unfolding against a profitable core business.
Guidance for the fourth quarter of 2026 landed at $240.0 billion to $247.0 billion in revenue, also below consensus. Reuters reported that the forecast sits largely under Wall Street's expectations, alongside concerns about demand in the seasonally critical retail period. Operating profit for the closing quarter is projected at $28.5 billion to $33.5 billion — a forecast, not a result, and the next concrete test for the bull case.
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The Capex Question Takes Center Stage
What matters for valuation, then, is not AWS growth alone but its relationship to rising capital outlays. CEO Andy Jassy said yesterday, according to Reuters, that capital expenditures in 2027 would be "significantly higher" than in 2026. Investors must judge whether the added demand can economically justify that spending. A strong growth rate speaks to appetite for cloud services; it does not by itself prove an adequate return on future investment.
BMO's optimism rests on cloud acceleration offsetting slower growth in advertising and retail — a bet that AWS can carry the softer parts of the business. The bearish counterargument begins with the holiday quarter: if weaker retail momentum coincides with mounting investment requirements, the bullish case narrows. The risk would not necessarily be a weak cloud unit, but a company whose fortunes depend ever more heavily on its continued momentum.
Device Unit Adds Another Drag
A separate pressure point is emerging in hardware. Business Insider reported on Tuesday, citing an internal planning document, that Amazon expects a gross loss of $612 million in its devices business for 2026, with rising memory chip costs cited as a burden.
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Elsewhere, Amazon is pressing ahead with its satellite venture. Amazon Leo announced on Wednesday that United Launch Alliance would fly another 40 satellites on a Vulcan rocket, with the launch slated for November 13, 2026 — contingent on approval of the launch range.
For now, shareholders face a trade-off between cloud strength already on display and capital deployment still to come. The optimistic scenario requires both sustained demand and disciplined execution; only their combination would give the higher targets real substance.
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