Amazon Stock (AMZN) Upgraded as AWS Expected to Accelerate Revenue Growth

Amazon's stock (AMZN) has received an upgraded rating from Wells Fargo, signaling increased confidence in the company's cloud computing division, Amazon Web Services (AWS), and its potential to drive future revenue acceleration.

The upgrade to “Overweight” reflects a belief that AWS will outperform expectations, potentially reversing the stock's year-to-date largely flat underperformance.

Wells Fargo's revised price target for AMZN is now $280, a substantial increase from the previous $245, and 27% above the current trading level. This optimistic outlook is primarily due to expectations that AWS sales will rise by 22% in 2026, exceeding the consensus estimate by four percentage points. A key driver of this growth is expected to be “Project Rainier,” a compute capacity build developed in partnership with Anthropic.

This project is anticipated to significantly boost AWS capabilities and attract more clients, which should meaningfully start to impact financials in January 2026. The firm believes that AWS’s share losses will peak in 2025, setting the stage for renewed growth.

Adding to the positive momentum, Amazon Web Services (AWS) and SAP SE have announced a collaboration focused on enhancing digital sovereignty across Europe. This initiative involves integrating SAP's Sovereign Cloud capabilities with the AWS European Sovereign Cloud, providing security-hardened cloud solutions tailored for regulated industries and governments.

Amazon is planning to invest EUR 7.8 billion in this European cloud infrastructure, highlighting its commitment to expanding its presence and addressing the specific needs of European customers. The collaboration aims to meet the evolving digital sovereignty needs of European customers, uniting SAP’s enterprise expertise with AWS's infrastructure and operational capabilities.

The expansion into the European market is a strategic move by Amazon to capture a larger share of the growing cloud computing market while also addressing regulatory requirements related to data sovereignty. By offering sovereign cloud solutions, Amazon is positioning itself to attract clients in highly regulated sectors, such as government and finance, where data security and control are paramount. This move will allow expansion into markets previously unavailable due to regulatory restrictions.

Analysts view Amazon's strategic initiatives, particularly the focus on AWS growth and the expansion into the European cloud market, as positive indicators for the company's future performance. The anticipated revenue acceleration in AWS, driven by Project Rainier and the collaboration with SAP, could significantly impact Amazon's overall financial results and potentially reverse the stock's underperformance.