Amazon’s AI Arms Race: KeyBanc Says Massive Capex Is a Feature, Not a Bug

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In a new note, the firm reiterates its Overweight rating on Amazon and nudges its price target up to $335 from $330, based on 25.5 times 2028 earnings, as it extends its valuation horizon and edges ...

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Management has already signaled that faster AWS growth requires more up‑front spending, and KeyBanc leans into that message, penciling in 2027 and 2028 capital expenditures of $331 billion and $356 billion. \nThat compares with Street estimates of $235 billion and $241 billion, implying KeyBanc is underwriting a materially steeper investment curve as Amazon races to build data centers and secure power for AI workloads.\nThe firm ties that capex stance directly to a swelling AWS backlog and a series of long‑dated power and capacity deals. It expects AWS backlog to reach around $485 billion, driven largely by a $100 billion, 10‑year agreement signed with Anthropic in April. \nAdditional commitments from OpenAI and Anthropic — 2GW of power over eight years and 5GW over 10 years, respectively — are framed as structural demand signals, reinforcing the view that incremental compute remains both scarce and valuable.\nIn that context, Amazon’s spend‑now posture becomes a rational strategy to deepen an AI infrastructure moat, even if it compresses near‑term margin upside. \nKeyBanc’s message to investors: tolerate the capex surge and focus on what the firm sees as a durable, high‑growth AWS earnings stream stretching toward the end of the decade.\nPhoto: PJ McDonnell / Shutterstock\nThis content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.\nTo add Benzinga News as your preferred source on Google, click here.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"isLaohu8Offline":false,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.45.2","shortVersion":"4.45.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2652429592","isCrawlerRequest":true}