AWS Momentum Supports Amazon.com's (AMZN) Expanding AI and Cloud Strategy
Amazon Inc. (NASDAQ:AMZN) is among the best machine learning stocks to buy according to analysts. Following its Q4 2025 results, UBS lowered its price target on the stock to $301 from $311 on February 6. Amazon’s FY 2026 capital expenditure guidance of $200 billion surprised the market and UBS, which were expecting capex to be around $150 billion. According to UBS estimates, growth for Amazon’s cloud services unit, Amazon Web Services (AWS), will rise to 38% in 2026, doubling from 19% in 2025. Moreover, the firm expects Amazon to maintain mid-30% growth if elevated spending continues through 2027.
Earlier, on February 4, Bloomberg reported that AWS and Prosus NV had signed a multi-year cloud and artificial intelligence agreement to expand the latter’s technology footprint in Latin America, Europe, and India. Prosus will leverage AWS’s advanced cloud infrastructure and AI capabilities to develop new AI-first applications/products and enhance its service portfolio in these geographies.
On the deal’s prospects, Greg Pearson, Vice President, AWS Global Sales, said:
Prosus demonstrates how commerce companies are leveraging AI to transform customer experiences.” He added, “By combining AWS’s AI and machine learning capabilities with Prosus’s operational expertise across its portfolio, we’re changing how customers experience and discover products.
While the value of the deal was not disclosed, the Head of Prosus Ecosystem, Igor Cardoso, stated in an interview with Bloomberg that the deal could run into “hundreds of millions of dollars.”
AWS remains Amazon’s growth engine. In its earlier note on February 3, UBS said the market is not valuing a significant expansion opportunity in AWS, as it sees a potential doubling of AWS revenue by 2028 and a significant push toward cash flow generation.
Although Amazon Inc. (NASDAQ:AMZN) has had a lacklustre performance over the past year, analysts remain highly positive on the stock (~92% rating it Buy), with a consensus median price target of $285, implying a 38% upside.
Amazon.com Inc. (NASDAQ:AMZN) operates across e-commerce, digital content, advertising, and cloud computing. Its online and offline stores offer both in-house and third-party products, while its Amazon Web Services (AWS) division runs one of the world’s largest data center networks.
Amazon uses machine learning across its business, from product recommendations and pricing to logistics and fraud detection. In addition, through its Amazon Web Services, it provides machine learning tools and cloud infrastructure to other companies.
While we acknowledge the potential of AMZN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Cerebras (CBRS.US) Cloud Business Soars, Masking Hardware Decline; OpenAI Supports Half of Cloud Revenue
Cerebras achieved record Q3 revenue, but hardware income dropped by nearly 30%, while cloud business accounted for two-thirds of total revenue. OpenAI contributed $72.4 million. The company raised its full-year guidance and expects Q4 to be close to breakeven.
Microsoft (MSFT.US) offers voluntary buyout packages to about 60,000 employees: Structural divergence in U.S. employment under AI transformation
In 2026, the U.S. labor market is characterized by both low layoffs and weak hiring. Companies like Microsoft and American Express are leveraging AI to optimize their workforce, while data centers are driving growth in the construction sector. However, entry-level white-collar jobs face increasing pressure, with real wages experiencing negative growth and structural transformation risks becoming more prominent.
"Inflation is really too high"! Federal Reserve "third-in-command": The Fed must continue to take action and promptly bring the price level back to 2%
John Williams, President of the New York Federal Reserve and the “number three” official at the Federal Reserve with a permanent voting right, stated that U.S. inflation remains high and policymakers must take further action to curb price pressures.
Jensen Huang steps down, and the "biggest patron" of new AI players is gone too
Anthropic's tens-of-billions IPO investment, Figure AI's additional $1 billion, and Nscale's over $5 billion credit guarantee are all in negotiations but their outcomes remain uncertain. Meanwhile, its $500 billion AI financing platform has stalled, and some clients are considering switching to AMD or Google. Successor Kress has a conservative style and has repeatedly vetoed deals aggressively promoted by Jensen Huang, signaling the possible end of Nvidia's era of bold investments.
Crypto prices
More
