Sell-side on Amazon (AMZN): Shares hit as another mega-cap name hikes FY26 capex, although revenue beat expectations

• To recap, Amazon (AMZN) topped Q4 revenue and EBIT expectations, driven by accelerating AWS growth and continued retail margin expansion, but hiked FY26 capex to USD 200bln, which participants are focusing on, and it is seemingly reigniting concerns around long-term return on invested capital.

Sell Side Commentary

• UBS lowers PT to USD 301 (prev. 311) and keeps a ‘Buy’ rating; says USD 200bln FY26 CapEx guide implies a sharp acceleration in AWS, with ‘26 growth potentially doubling to 38% & backlog ramping towards USD 400bln, supporting mid-30% growth into 2027 if capital intensity hold. On this trajectory, UBS adds, AWS could roughly double rev. & op. profit in two years, driving 2027E GAAP EPS to roughly USD 14.
• Morgan Stanley lowers PT to USD 300 (prev. 315) and keeps an ‘Overweight’ rating; AWS is accelerating with even faster growth ahead & Retail is delivering with improving efficiency. While AMZN is investing, has a track record of showing return on invested capital, leaving the firm "bullish" on what it sees as an "under-appreciated GenAI winner."
• TD Cowen lowers PT to USD 300 (prev. 315) and keeps a ‘Buy’ rating; while revenue reported a 1% beat vs. exp., believes investors will focus on "record" capex.
• Evercore lowers PT to USD 285 (prev. 335) and keeps an ‘Outperform’ rating; calls it a "Beat & Mixed" quarter. Q4 results "golden," w/ AWS delivering material rev. growth acceleration, Cloud market share gains, very strong backlog & consistently high profitability, while Retail & Ad segments' rev. growth was very consistent. Evercore still believes its AMZN long thesis is intact & AWS results are proving out return on AI, it views the stock as likely range-bound until 2026 rev. acceleration becomes more apparent and/or the market sees the potential for a FCF snapback in 2027.
• KeyBanc lowers PT to USD 285 (prev. 308) and keeps an ‘Overweight’ rating; Q4 results continued the theme of large-cap earnings season regarding materially investing CapEx to meet a large potential demand pool of AI workloads. The near-term effect is clear w/ EPS growth being reduced & FCF remaining depressed. KeyBanc adds it caused the firm to lower its PT, but it still sees attractive long-term returns from AWS & optionality on Amazon Leo monetization.
• Citi lowers PT to USD 265 (prev. 320) and keeps a ‘Buy’ rating; while Web Services rev. growth reaccelerated to 24% Y/Y, ’26 CapEx guidance 2026 drove a selloff. However, Citi believes the capex can further differentiate AWS' AI offerings & sees FCF rebounding in 2027. Stock remains a top pick at Citi.
• JPM lowers PT to USD 265 (prev. 305) and keeps an ‘Overweight’ rating; announced a big capex step up for 2026, and believes Amazon is "willing to take some near-term profit pain to drive significant long-term growth opportunities."
• Piper Sandler lowers PT to USD 260 (prev. 300) and keeps an ‘Overweight’ rating; notes AMZN remains relentless on lowering cost to serve & working toward an AI product cycle. Thinks building capacity is the right long-term move, but the market seems spooked.
• Cantor Fitzgerald lowers PT to USD 250 (prev. 260) and keeps an ‘Overweight’ rating; notes they beat Q4 rev. & EBIT exp., driven by accelerating AWS growth & continued retail margin expansion, but softer-than-exp. next Q EBIT outlook & sharply higher FY26 capex outlook may reignite concerns around long-term return on invested capital despite the intact AWS & retail margin expansion story.
• DA Davidson lowers PT to USD 175 (prev. 300) and downgrades shares to ‘Neutral’ from ‘Buy’; writes that in the context of results from MSFT & GOOGL, sees AWS continuing to lose its lead & now "scrambling to catch up through escalating investment”. The firm is also increasingly concerned about Amazon Retail's transition to a new chat-driven Internet dominated by Gemini and ChatGPT.