Raymond James on why Amazon is still a ’show me’ story

Investing.com -- Amazon’s cloud unit remains a “show me” story despite growing enthusiasm around generative AI, according to a new note from Raymond James analysts.

The firm said it conducted an “in-depth AWS analysis framing out growth scenarios,” including AI infrastructure buildouts, pricing trends for Nvidia’s Hopper and Blackwell chips, and the impact of Amazon’s proprietary Trainium processors.

While the analysts said “a modest acceleration to 18.5% in 2026 is reasonable,” they added that they failed to collect enough evidence to “support an acceleration to >20% underlying the bull case.”

In Raymond James’s base case, Amazon Web Services (AWS) is forecast to grow 17.7%, 18.5%, and 18.9% in 2025, 2026, and 2027, respectively, with generative AI contributing $17.5 billion in revenue by 2027.

That compares with a bull case where “GenAI rises to $25B in 2027” and a bear case where it “rises to $6.5B.”

The analysts noted both positive and negative signals for AWS momentum. On the bullish side, “Blackwell/B200 capacity pricing [is] up 15% in 4Q25” and “spot pricing up 60% quarter-on-quarter,” with “potential for Trainium3 to 4x performance” compared with the prior generation.

However, Raymond James also cited “rising multi-cloud adoption driven by Vertex/Gemini momentum” and a “lack of uptake of Nova LLM … and unclear momentum with Bedrock Agent framework.”

Raymond James maintained a $230 price target for Outperform-rated Amazon, saying the valuation “screens relatively undemanding” at 24 times 2027 earnings.

The analysts added that they are looking for “improved visibility into AWS growth as a key swing factor,” while remaining “optimistic on the mid-term robotics opportunity.”

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