Amazon’s Cloud Ambitions Spark Analyst Optimism for Stock Revival

After a period of notable underperformance that saw it lag behind its “Magnificent Seven” peers, Amazon is attracting renewed attention from Wall Street. A significant vote of confidence from Wells Fargo suggests a potential turnaround may be brewing, centered on the company’s cloud computing division, AWS.

Analyst Upgrade Points to Accelerated Cloud Growth

In a decisive move on Wednesday, Wells Fargo analyst Ken Gawrelski raised his rating on Amazon shares from “Equal Weight” to “Overweight.” The upgrade stems from what the analyst described as “greater conviction” in an impending acceleration of growth at Amazon Web Services. The bank’s revised forecast is notably bullish, projecting AWS revenue growth of 22.1% for 2026. This figure substantially outpaces Wells Fargo’s prior estimate of 19.3% and sits well above the Wall Street consensus of 18.8%.

A key catalyst for this optimism is identified as “Project Rainier,” a dedicated AWS data center in Indiana being developed for AI partner Anthropic. Wells Fargo believes these substantial investments in artificial intelligence infrastructure are poised to begin yielding significant returns.

Should investors sell immediately? Or is it worth buying Amazon?

Strategic Moves Strengthen Market Position

Further bolstering Amazon’s prospects is a recently announced expanded partnership with German software leader SAP. SAP’s Sovereign Cloud functionalities will be integrated into the new AWS European Sovereign Cloud, a strategic initiative aimed at capturing business from highly regulated industries and public sector clients across Europe. This alliance is expected to considerably enhance Amazon’s competitive standing by addressing complex compliance requirements that many rivals cannot meet.

According to the Wells Fargo analysis, AWS is anticipated to absorb the bulk of its market share losses by 2025. The subsequent years, 2026 and 2027, are forecast to be periods of robust growth, driven by the combination of new data center capacity and strategic AI partnerships—precisely the catalyst needed after Amazon’s recent stock market slump.

The overarching sentiment among market experts remains positive, with 47 out of 50 analysts maintaining either a “Buy” or “Strong Buy” recommendation on the shares. The critical test will be whether Amazon’s quarterly results, due at the end of October, can live up to these heightened expectations.