Morgan Stanley revised its outlook on Amazon after tariffs between the US and China came to a reasonable level.
The brokerage maintained the overweight rating and raised the target for Amazon from $250 to $300, indicating a 35% upside from the previous day’s closing price.
The move comes as Amazon stock has already rallied over 20% in the past three months, significantly outperforming the S&P 500’s gain of more than 17% during the same period.
In the last month alone, Amazon shares have added more than 4%.
Analyst Brian Nowak pointed to an improved macroeconomic environment as a major reason for the upgraded forecast.
“The macro backdrop has significantly improved since mid-April,” Nowak noted, referencing a period when he had previously lowered Amazon’s earnings estimates in response to higher tariff rates announced by the Trump administration.
At that time, the US imposed tariffs totaling 145% on Chinese imports.
However, with the rate now reduced to 55%, Nowak has adjusted his estimates to reflect the more favorable trade landscape.
Rebound in AWS and Anthropic’s expanding role
Alongside a better trade environment, Amazon Web Services (AWS), the company’s cloud computing arm, is also expected to experience renewed momentum.
Nowak highlighted a lessening of supply constraints and increased contributions from AI startup Anthropic as key factors driving this improvement.
Anthropic, in which Amazon has invested significantly, is expected to become a growing part of AWS’s revenue stream. “Looking ahead, we model Anthropic to reach $10 billion/$19 billion of revenue in 2026 and 2027,” Nowak wrote.
Based on estimated gross margins of 60% (excluding support costs), and assuming 75% of the cost of goods sold flows through AWS, Anthropic’s contribution could expand from the current level of around 60 basis points to approximately 150 basis points or more.
This expected acceleration in AWS growth comes at a crucial time, as Amazon continues to strengthen its position in the competitive cloud computing sector, particularly in artificial intelligence services.
Amazon is also considering to invest more in Anthropic, Financial Times reported on Thursday.
Amazon has already invested $8 billion in the AI company.
Market confidence remains high
Investor sentiment around Amazon remains largely positive.
According to LSEG, 70 out of 73 analysts covering the stock have either a “strong buy” or “buy” rating.
The consensus price target sits at around $245, indicating over 10% upside from current levels even before considering Morgan Stanley’s more bullish $300 projection.
Morgan Stanley’s updated outlook underscores how easing macroeconomic pressures, particularly around trade, are opening the door for tech giants like Amazon to regain momentum.
With a recovering AWS business and expanding influence from strategic AI investments like Anthropic, Amazon appears well-positioned to capitalize on the more stable environment heading into 2026 and beyond.
The post Morgan Stanley sees 35% upside for Amazon stock, here’s why appeared first on Invezz
