Amazon stock jumped to lead the Dow Jones Industrial Average on Oct. 19, the same day Morgan Stanley named it the firm’s top pick and set a price target that would push AWS’ total revenue to $1 trillion for the first time, according to Investopedia. Analyst Brian Nowak set a new target of $350, up from $335, representing roughly 40% upside from the stock’s Oct. 16 close.
The upgrade lands at an unusual moment. Amazon’s cloud business is expanding at a pace Wall Street did not expect. Its AI infrastructure bet is producing visible returns, and one of the company’s biggest competitors just ran into a public fight with Amazon over how AI agents shop online. The stars, in Nowak’s view, are lining up.
The “Rule of 90” case for buying Amazon now
Nowak’s note centers on what he calls the “Rule of 90” for Amazon Web Services. The idea is that when revenue growth plus operating margin crosses 90%, a cloud business earns a premium multiple, Motley Fool reported.
AWS is not there yet, but Nowak thinks it will get there. He projects AWS growth of 47% in 2027 and 42% in 2028, with operating margins of 42% and 44%, respectively.
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Put those numbers together and you get an AWS business that nearly triples its revenue between 2025 and 2028. At those margins, AWS would clear the Rule of 90 threshold and, in Nowak’s model, justify a higher valuation for the entire company. He sees Amazon earning around $16.50 a share in 2028, roughly 7% above the Wall Street consensus.
The projection rests on Amazon’s position inside the cloud arms race. AWS grew 37% to $42.2 billion in revenue during the second quarter of 2026, its fastest pace in 18 quarters, and is now running at a $169 billion annualized rate. Amazon also raised its 2026 capital expenditure to $220 billion. CEO Andy Jassy cited falling memory prices as one reason to accelerate the spending.
AWS is betting on Bedrock and Nvidia to pull ahead
Nowak’s optimism on margins ties directly to Amazon’s AI platform strategy. Bedrock, AWS’s managed AI service, gives enterprise customers access to at least 10 fully managed third-party models, according to Amazon’s SEC filing. Nowak expects Bedrock to become a growing source of high-margin revenue as more companies run their AI workloads on AWS rather than building their own infrastructure.
The hardware picture adds to that argument. AWS and Nvidia announced in August that they would deploy an additional 2 million Nvidia GPUs over roughly the next two years, a commitment that would give AWS one of the largest GPU fleets in the world. That kind of scale matters because the biggest enterprise AI workloads require consistent, massive compute that only a handful of providers can guarantee.
KeyBanc Capital Markets also has a $350 target on Amazon, projecting 38% AWS growth versus a 37% street consensus, as TheStreet reported. Both firms see AWS’s trajectory as underappreciated by the broader market.
Meta’s Muse just handed Amazon an unexpected edge
One of the more unusual factors in Amazon’s favor right now is a fight it did not start. Meta launched Muse, an AI shopping assistant, and integrated it with retailers including Walmart and Best Buy. The plan was for Muse to help users browse, compare and buy products across the web, with Meta collecting a transaction fee on each purchase, according to TheStreet.
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Amazon blocked Muse from its store on Sept. 20, after Meta declined its request to remove the bot. Amazon bars outside companies from using automated tools to shop on its site, and its spokesperson said third-party agents like Muse have the same obligations as other apps.
Amazon blocked Muse for a reason. Every AI purchase routed through a Meta checkout is a transaction Amazon loses. Blocking the bot kept that money in-house.
What the $350 target means for investors
Morgan Stanley’s Overweight rating and $350 price target are not a guarantee. Amazon traded near $250 around Oct. 16, meaning the stock would need to climb about 40% to reach that level. That kind of move rarely happens in a straight line, and a lot has to go right on AWS growth for Nowak’s 2028 earnings estimate to hold.
Rate risk is the one to watch. Amazon has $220 billion earmarked for AI infrastructure, and that bet only pays off if enterprise demand stays strong. A pullback leaves a lot of empty rack space.
AWS is growing faster than any major cloud rival. Bedrock is signing enterprise customers. Amazon shut Muse out rather than share the checkout. Nowak’s argument is that none of this is fully priced in yet, and that AWS hits the Rule of 90 before the street expects it to.
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