Quick Summary
- Evercore ISI maintains Outperform rating on Amazon (AMZN) with $285 price target intact
- AWS revenue forecasted to reach $163B in 2026 (27% YoY growth) and $214B in 2027 (31% YoY growth)
- Amazon designated as Evercore’s top large-cap investment opportunity for 2026, with shares near 3-year P/E trough
- Firm increases total revenue and operating income projections by 2–3%, now 4–5% higher than Street consensus
- Capital expenditures anticipated to hit ~$250B by 2027, resulting in ~$10B annual free cash flow deficits
Evercore ISI’s Mark Mahaney confirmed his Outperform stance on Amazon.com (AMZN) this Wednesday, maintaining a $285 price objective. With shares trading around $208.76, this represents approximately 37% potential appreciation.
Mahaney designated Amazon as his premier large-cap investment recommendation for 2026, emphasizing attractive valuation metrics, robust cloud expansion, and emerging business ventures as primary catalysts.
This bullish outlook followed an updated analysis of Amazon Web Services, the tech giant’s cloud computing arm. Evercore currently anticipates AWS will generate $163 billion in revenue during 2026, representing 27% year-over-year expansion, before accelerating to $214 billion in 2027 with 31% growth.
Regarding profitability, Evercore forecasts AWS operating margins at 34% for 2026, with a modest decline to 32% in 2027. These figures remain strong and underscore the cloud division’s impressive operational scale.
Evercore additionally increased its overall Amazon financial projections. The firm boosted revenue and operating income estimates by 2–3%, positioning them 4–5% above prevailing Wall Street consensus figures. This represents a significant divergence.
Investment Case Based on Valuation
A cornerstone of Mahaney’s thesis centers on Amazon’s current valuation being attractive relative to historical norms. The stock trades near a three-year low on a price-to-earnings multiple, with a current P/E of 29.11 and a PEG ratio of 0.98. This PEG metric indicates the market may be undervaluing anticipated growth prospects.
Evercore highlighted emerging company projects, including Project Leo and Perishable Checkout, as potential catalysts that could deliver more substantial contributions throughout 2026.
BofA Securities similarly maintains a Buy recommendation on shares, establishing a $275 target, following Amazon’s recent launch of 1-hour and 3-hour delivery services across numerous American metropolitan areas.
Capital Spending Remains a Headwind
The primary concern revolves around investment intensity. Evercore anticipates Amazon’s capital expenditures will escalate to approximately $250 billion by 2027, representing a considerable outlay. The firm forecasts roughly $10 billion in free cash flow deficits for both 2026 and 2027 stemming from these investments.
Capital spending intensity — calculated as capex relative to total revenue — is projected to crest in 2026, although Evercore acknowledged this peak could persist into 2027. This presents a genuine constraint on near-term cash generation capacity.
Nevertheless, Mahaney believes this risk is adequately reflected in current share prices, and the overall risk-reward profile remains compelling.
On the corporate finance front, Amazon recently secured $36.9 billion through a multi-tranche debt issuance, while also completing a €14.47 billion euro-denominated bond sale. Separately, Jeff Bezos is reportedly pursuing $100 billion in capital for a new investment vehicle focused on manufacturing enterprises and AI-powered automation technologies.
According to the latest analyst data, 40 of 43 analysts covering AMZN maintain Buy ratings, with consensus price targets averaging $280.00 per share.
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