New Amazon Price Target After $200 Billion AWS Update

After boosting our price targets first for Alphabet (GOOGL) and earlier on Friday, for Apple (AAPL) , we are now doing the same for Amazon (AMZN) , taking our price target to $310 from $260.

As we make this adjustment, we would share that part of Friday's strong move in AMZN shares is likely due to short covering in response to the company’s consensus-shredding September quarter results, improving margin profile, the re-acceleration in Amazon Web Services (AWS) and continued gains in the high-margin advertising business. We continue to see the company as well positioned to pick up incremental market share during the holiday shopping season as cash-strapped consumers leverage digital shopping.

The latest short interest data from Nasdaq shows about 74.5 million shares were short as of October 15, which, based on average trading volume, equates to about 1.7 days to cover. This likely means we could see the shares fade somewhat in the coming days, but we’ll continue to keep our eye on the ball and the factors driving not only the top line but improving margin profile.

As we lift our AMZN target and reiterate our One rating, we will lift our panic point for the shares to $210 from $190. As the shares move toward our revised price target, we’ll inch up that panic point in response.

Now let’s dig into the quarter and what’s ahead:

September 2025 Quarter

Amazon’s September quarter revenues rose 13.4% year over year to $180.17 billion, topping the $177.9 billion consensus. Gains were had across all three major reporting segments, with the strongest at AWS, which came in at 20% year over year, marking its fastest growth rate in the last 11 quarters. This tells us Amazon is benefitting from AI and cloud adoption, plain and simple, and that led the segment to become 18% of total revenue. That, in turn, helped sustain overall operating margins compared to the year-ago quarter, offsetting margin declines in the North American and International segments.

However, we would remind you of two things. One, the $21.7 billion in operating income Amazon reported was well ahead of the $15.5 billion to $20.5 billion it guided to back in July. Two, earlier this year, Amazon telegraphed it would be expanding its rural delivery network across the U.S., which weighed on online margins, as did the impact of tariffs.

What those segment results mask is that Advertising and its 24% year-over-year growth was the quickest revenue grower in the quarter. We’ve discussed how Amazon is leveraging that effort across its retail and Prime Video business, and its margin influence is being felt as it too becomes a larger part of the overall Amazon pie. In the September quarter, Advertising drove 9.8% of Amazon’s revenue compared to 8.6% in the year-ago quarter, which is impressive considering the re-acceleration at AWS.

Implications and What’s Ahead

As we stated above, we continue to see Amazon’s retail-facing business taking consumer wallet share in the coming months, with further gains as well for its Advertising revenue stream. But when it comes to Amazon and its earnings prospects, the big question is what’s ahead for AWS, given that it drives around 65% of Amazon’s operating income.

During the earnings call, Amazon management shared that the AWS backlog grew to $200 billion exiting the September quarter. Moreover, that figure does not include several unannounced new deals in October, which together are more than AWS's total deal volume for all of the September quarter. Measured against the $33 billion in AWS revenue for the September quarter, that tells us the company has incredible visibility, but it also means that, like others, it could have booked more revenue if it had more available capacity.

On that topic, Amazon spent $34.2 billion in capex during the quarter, bringing its total year-to-date to $89.9 billion. With the company targeting total capex spending of $125 billion this year, it means that spending will take another leg up in the current quarter. And yes, Amazon joined Alphabet, Microsoft (MSFT) and Meta (META) in telegraphing a step up in AI and data center capital spending next year.

Lifting Nvidia, Marvell Price Targets

Now this is where things get interesting. On the one hand, the cumulative year-over-year increase in capital spending by those four companies and others competing with them gives us a reason to up our Nvidia (NVDA) price target to $230 from $200.

But as part of its capital spending increase, Amazon noted that it is seeing strong demand for its Trainium AI chips — no surprise given ramping spending and capacity issues elsewhere. During the September quarter, Amazon shared that those revenues grew 150% quarter over quarter and shared that its next-gen chip, Trainium 3, should debut later this year with volumes coming in early 2026. This has us thinking back to Marvell’s (MRVL) about a sizable revenue ramp for its custom silicon business during the current quarter. That, with the expected rise in overall spending and progress on other custom AI silicon customers, we’re taking our MRVL target to $125 from $115.

In making these price target changes, we will also up our panic points to $160 for NVDA shares and $75 for MRVL. As we mentioned above with our AMZN panic point, as the corresponding shares move higher, we’ll revisit our NVDA and MRVL panic points as well.

Should we see a modest near-term pullback in MRVL shares, that would lead to an even better risk to reward tradeoff in the shares following their recent and pronounced climb. That would in turn lead us to reconsider our current Two rating.

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At the time of publication, TheStreet Pro Portfolio was long AMZN, GOOGL, AAPL, MSFT, META, NVDA and MRVL.