Morgan Stanley recently tapped Amazon (NASDAQ: AMZN) as its "Top Pick," placing a $350 price target on the stock. Analyst Brian Nowak called Amazon a "Rule of 90" company, meaning its annual revenue growth rate and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin could exceed 90%.The analyst said he sees five catalysts for the stock to climb higher. First, Nowak sees Amazon's cloud computing unit, Amazon Web Services (AWS), growing faster than previously expected. He now expects AWS to grow by 47% next year and 42% in 2028, after Nvidia noted that Amazon is expected to buy 2 million of its graphics processing units (GPUs) over the next two years. The analyst also predicted that Amazon will spend a whopping $355 billion in capital expenditures in 2027 and $365 billion in 2028. In addition to AWS revenue nearly tripling from $128.7 billion in 2025 to $373.6 billion in 2028, Nowak also expects the segment's operating margins to expand. He sees them coming in at 42% in 2027 and 44% in 2028, helping lead to $16.50 in adjusted EPS in 2028. The analyst also thinks increased visibility into its AI model service, Bedrock, could help drive multiple expansion for the stock.
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