Amazon's stock just clinched its worst losing streak in nearly 20 years. It's giving investors AWS déjà vu. Investors are overlooking a golden artificial-intelligence opportunity that sits right in front of them, according to one analyst.
Amazon.com's (AMZN) stock is a "top pick" for Morgan Stanley analyst Brian Nowak, who believes both Amazon Web Services and the company's retail business are shaping up to be massive beneficiaries of the AI wave.
While Amazon's $200 billion capital-expenditures budget for 2026 raised fears of overspending, Nowak wrote in a Wednesday note that Amazon is on track to reap an impressive "yield" from its spending plans. He reiterated his overweight rating and $300 price target, 50% higher than current levels.
Nowak's view isn't exactly a popular one on Wall Street. Amazon's stock posted its worst losing streak since 2006 last week and plunged into a bear market.ak believes increasing capex is a bullish signal for the cloud business - one that could help drive over 30% growth for the segment. Last quarter, AWS growth accelerated to 24%, the fastest rate in 13 quarters.
"Investing and opening data centers will still dictate the slope of growth," Nowak wrote. Amazon, like other hyperscalers, has been capacity-constrained, meaning that it can't bring data centers online fast enough to fulfill customer demand. Nowak is measuring Amazon's return on its investment through a "capex yield."
According to Morgan Stanley's "capex yield" framework, which looks at incremental revenue as a percentage of capex, AWS's base-case yield of roughly 34 to 40 cents is about 50% below its long-term historical average of 77 cents.
If that yield improves even slightly to 45 cents - which is still a 40% discount to historical norms - AWS growth could surge into the mid-30% range, according to Nowak. Such an outcome would far exceed current market expectations of 25% to 26% for 2026 and 2027, he noted.
Additionally, Nowak believes Amazon will get a lift from the rise of agentic commerce - meaning that AI agents, such as Amazon's Rufus or third-party tools like OpenAI's ChatGPT, will handle the researching and purchasing of products. Rufus has already shown a 140-basis-point boost to growth in gross merchandise value as of late 2025.
The bigger opportunity could come from Amazon's existing collection of inventory, shipping infrastructure and other technological investments. Amazon sits on valuable shopping data that will be essential to any agentic shopping application, whether it be for ChatGPT, Google Gemini $(GOOGL)$ $(GOOG)$ or Meta Platforms (META).
"We look for horizontal agentic partnerships to emerge, which will make investors feel more confident in [Amazon's] long-term positioning," Nowak wrote.
Amazon's stock currently trades at roughly 19 times Morgan Stanley's 2027 earnings estimate of $10.41.
On a price-to-earnings-to-growth basis, Amazon trades at a 0.8x - a 40% discount to its peer median of 1.4x. Even at Morgan Stanley's $300 price target, Amazon would still trade at a 13% discount to the peer median.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Based on the user query and the provided news articles, Morgan Stanley analyst Brian Nowak's argument is that investors are overlooking Amazon's significant AI potential, creating a buying opportunity as the stock recently ended its worst losing streak since 2006 19. The core of his bullish thesis is that Amazon's massive capital expenditures, particularly a planned $200 billion for 2026, are not reckless overspending but a strategic investment likely to generate a high "yield" by powering growth in both Amazon Web Services (AWS) and its retail business 4.
Conclusion: Morgan Stanley analyst Brian Nowak contends that Amazon's stock represents a "golden" and overlooked AI opportunity because the market is myopically focused on near-term capital expenditure fears, while underestimating the substantial long-term financial benefits these investments will unlock across both its cloud and retail divisions.
Supporting Points:
AWS Growth Acceleration from AI Capex: Nowak believes the increased capital expenditure is a bullish signal for AWS, Amazon's cloud computing arm. He argues that bringing more data-center capacity online could drive AWS revenue growth past 30%. This is supported by AWS's recent performance, where growth accelerated to 24% in the last quarter, its fastest rate in 13 quarters 4. The analyst sees Amazon's infrastructure build-out as positioning AWS to capture a leading share of incremental cloud market demand, potentially becoming the top player by new share by 2027 26.
Retail Business Transformation via "Agentic Commerce": Beyond the cloud, Nowak highlights an "underappreciated" AI opportunity within Amazon's core retail operations. He points to the rise of "agentic commerce," where AI agents (like Amazon's Rufus chatbot or third-party tools) could revolutionize online shopping. These agents could handle complex, multi-step purchase decisions, potentially driving higher customer engagement and spending directly on Amazon's platform 4.
Context of Market Sentiment and Valuation: This bullish view contrasts sharply with recent market sentiment. Amazon's stock recently plunged into a bear market, posting its longest losing streak since 2006 due to widespread fears that massive AI spending across Big Tech would strain balance sheets without sufficient near-term returns 38910. Nowak's $300 price target implies roughly 50% upside from recent levels, suggesting he believes the current sell-off is an overreaction 4. This fear has impacted valuation, with Amazon's forward P/E ratio near 26.31, below its historical average of around 45.9, indicating a potentially discounted entry point if his growth thesis proves correct.
Broader Analyst Consensus and Institutional Activity: Nowak's view, while distinctly bullish, exists within a mixed landscape. The overall analyst consensus remains positive, with 47 "Buy" ratings and a mean price target of $278.44 1. However, notable investors like Berkshire Hathaway trimmed their Amazon stake in Q4 2025 630, while others like Bridgewater increased their position 28, reflecting divergent views on the stock's near-term prospects amid the AI investment cycle.
Conclusion: In summary, the analyst's perspective suggests that the market's punitive reaction to Amazon's AI spending plans fails to account for the dual engines of growth it is fueling: supercharged AWS expansion and a transformative shift in e-commerce through AI agents. He views the current stock price weakness not as a fundamental breakdown, but as a temporary disconnect between short-term fears and long-term strategic positioning.