Goldman Sachs raises Amazon stock price target to $275 on AWS growth outlook

Goldman Sachs has raised its price target on Amazon (AMZN) to $275.00 from $240.00, maintaining a Buy rating, driven by strong growth prospects in its cloud computing (AWS) and advertising segments. The firm projects AWS to achieve over 20% topline growth with low-to-mid-30% GAAP EBIT margins through 2026, noting a favorable 3:1 upside/downside skew from current levels. Concurrently, Amazon is expanding its private label grocery brand, autonomous vehicle testing via Zoox, and enhancing its sports content strategy through partnerships with the NBA and FanDuel, indicating diversified revenue stream development.

Analysis

Goldman Sachs has materially increased its 12-month price target for Amazon.com (AMZN) to $275 from $240, reiterating a 'Buy' rating and citing a favorable 3:1 upside/downside skew from its current trading level of $222.41. The core of this bullish thesis rests on the projected performance of Amazon Web Services (AWS), which Goldman anticipates will achieve over 20% topline growth while sustaining low-to-mid-30% GAAP EBIT margins through the second half of 2025 and into 2026. This optimism is supported by factors including a strong revenue backlog, contributions from AI services like Anthropic, and easing capacity constraints. Beyond AWS, Amazon is executing on several strategic fronts that reinforce its growth narrative. The company is consolidating its grocery offerings under a new private label, expanding its Zoox autonomous vehicle testing into a new major market, and deepening its sports media presence through key partnerships with the NBA and FanDuel. These initiatives indicate a multi-pronged strategy to enhance its consumer ecosystem and develop future revenue streams. A minor operational incident involving a drone collision, now under federal investigation, represents a potential but seemingly isolated risk against a backdrop of strong fundamental momentum and strategic expansion.

Key Decisions for Investors

• Given Goldman Sachs's upgraded $275 price target and a favorable 3:1 upside/downside skew, investors may consider the current stock price an opportunity to initiate or add to long positions, aligning with the firm's strong 'Buy' conviction.
• Investors should closely monitor the quarterly performance of Amazon Web Services, as the investment thesis is heavily contingent on its ability to deliver sustained topline growth above 20% and maintain low-to-mid-30% GAAP EBIT margins.
• Look beyond immediate earnings to the maturation of long-term growth catalysts, including the Zoox autonomous vehicle expansion, the new private-label grocery strategy, and monetization of media content through sports partnerships, as these are key to diversifying future revenue.