Analysts Lift Amazon (AMZN) Price Target to $295 as AI and Cloud Add Up

Amazon (AMZN) has officially put investor doubts to rest. After a year of market concerns about a slowdown in its cloud business, the e-commerce giant’s Q3 2025 results revealed a sharp re-acceleration in Amazon Web Services (AWS)—its most crucial growth engine. Since AMZN published its results on October 30, no fewer than 40 Wall Street analysts have raised their price targets on the stock. As things stand, every single analyst tracked by TipRanks is bullish on the stock.

Coupled with exceptional momentum in advertising revenue, and a removal of previous doubts over its cloud and AI outlook, I’m turning Bullish on Amazon stock with a $295 price target based on a sum-of-the-parts valuation.

Why the AWS Renaissance Matters

Amazon’s cloud division, Amazon Web Services (AWS), posted an impressive 20% year-over-year revenue increase to $33 billion in Q3 2025—its fastest growth rate since 2022. This acceleration brought a major sigh of relief for investors, reaffirming AWS’s role as Amazon’s most powerful, high-margin growth engine. Representing roughly 18% of total quarterly sales, AWS converts 34.6% of its revenue into operating income, far outpacing the 3%–7% margins of Amazon’s retail and e-commerce operations. Simply put, when AWS gains momentum, Amazon’s overall profitability outlook brightens significantly.

The resurgence in AWS growth highlights two critical dynamics. First, enterprise demand for cloud computing is re-accelerating, suggesting that the budget-tightening phase among cloud customers has largely passed. Second, artificial intelligence (AI) workloads are surging—driven by explosive growth in generative AI, model training, and compute-intensive applications.

Adding to this momentum, Amazon recorded a $9.5 billion pre-tax gain on its investment in Anthropic, the developer behind the Claude AI models. More than just a one-time windfall, this gain underscores how Amazon’s strategic positioning in AI is beginning to pay off—drawing both top talent and customers deeper into its ecosystem, while fueling new demand for AWS.

To maintain its leadership in the AI era, Amazon is committing unprecedented resources, guiding for a massive $125 billion in capital expenditures for 2025. These investments reflect an all-in strategy to build a durable competitive moat and capture the next decade of AI-driven cloud growth.

The Two “Hidden” Businesses Worth $1.1 Trillion

While AWS often dominates the spotlight, Amazon’s true valuation potential emerges when its two other high-margin segments—Advertising and Subscription Services—are valued on their own merits.

First, the Advertising powerhouse. This segment surged 24% year-over-year to $17.7 billion, translating into a $70.8 billion annualized business that’s growing even faster than AWS and likely carries higher profit margins. Amazon’s ads appear precisely at the point of purchase, giving them unmatched commercial intent and making this division a high-quality cash flow engine.

Second, Subscription Services. Encompassing Prime memberships, Audible, and other recurring offerings, this segment generated $12.57 billion in Q3, up 10% year-over-year—a $50.3 billion annualized, high-margin, and sticky revenue stream.

Despite their profitability and durability, the market still tends to lump these two divisions under Amazon’s “Retail” umbrella. In reality, they are platform-style businesses—scalable, recurring, and asset-light—that deserve a premium valuation multiple well above traditional retail operations.

Amazon’s Retail Revolution Continues

For years, Amazon’s retail business was defined by a “growth at all costs” mindset. Today, the focus has shifted to smart, profitable growth, as the company sharpens operational efficiency and trims expenses, including workforce reductions.

In Q3 2025, Amazon’s North America segment saw YoY sales growth of 11%, while International revenue rose 10%. Impressively, these divisions delivered $4.8 billion and $1.2 billion in operating income, respectively, despite incurring significant employee severance costs and a $2.5 billion FTC charge.

The transformation of Amazon’s retail operations is paying off. Following years of investment in regional fulfillment and logistics optimization, the business now generates meaningfully higher operating income. The retail segment has evolved into a self-funding, increasingly profitable engine—still growing, but now doing so with discipline and efficiency.

Breaking Down Amazon’s True Value: A Sum-of-the-Parts Analysis

Valuing Amazon’s equity isn’t as straightforward as applying a traditional price-to-earnings (P/E) multiple. The company operates a diverse portfolio of businesses with distinct growth profiles and margin structures. As such, a Sum-of-the-Parts valuation offers the most accurate and comprehensive way to capture Amazon’s true intrinsic value.

1.    AWS: The Cloud Giant

With $132 billion in annualized revenue, I’d value AWS like a cloud computing company. Using a conservative 12.6x EV/Sales multiple (in line with Microsoft’s (MSFT), Amazon Web Services alone could be worth a conservative $1.66 trillion.

2.    Advertising (The High-Margin Cash Cow)

With potentially more than $70 billion in annualized revenue and incredible growth rates, one could apply a 9.5x EV/Sales multiple (a blend of Meta (META) and Alphabet (GOOGL)). This segment contributes about $672.6 billion to Amazon’s enterprise value.

3.    Retail (The Efficient Foundation)

Valuing Amazon’s $450 billion-plus in retail revenue is tricky. Given its hybrid nature (online stores, physical stores, and a third-party marketplace), I would use a conservative 1.3x EV/Sales multiple to value it as a retailer like Walmart (WMT), even though platform companies like MercadoLibre (MELI) at 4.3x EV/Sales fetch 4x better valuations. This adds about $585 billion to the total Amazon value.

4.    Subscriptions (The Sticky Sales Machine)

Amazon’s Subscription Services business segment, which includes Prime memberships, Audible, and other recurring fees, brought in $12.57 billion last quarter. This is a $50 billion annualized, high-margin, sticky revenue stream anyone could attach a 6x EV/Sales multiple (a blend of Netflix (NFLX) at 11x and Costco (COST) at 1.5x)  to come up with a $300 billion valuation.

Bringing It All Together:

• Total Enterprise Value: $1,660B (AWS) + $672B (Ads) + $582B (Retail) + $300B (Subs) = $3.2 trillion
• Subtract Net Debt: –$58.7 Billion
• Implied Equity Value: $3.155 Trillion
• Divide by Shares Outstanding (10.69 Billion): $295.16 per share

This SOTP analysis yields a conservative price target of $295 for Amazon stock, suggesting significant upside potential from current levels.

Key Risks for Investors to Consider

Key risks for Amazon include intensifying competition, regulatory pressures, and potential macroeconomic headwinds. Although AWS is showing renewed momentum, Microsoft Azure’s 28% growth outpaces it, while Oracle and Alphabet continue to win new cloud customers at a rapid clip. The cloud computing landscape remains fiercely competitive, with rivals aggressively investing to capture enterprise workloads.

On the regulatory front, Amazon continues to face significant antitrust scrutiny. The recent $2.5 billion FTC settlement may not be the final chapter, as ongoing investigations—particularly around Project Nessie—continue to unfold. Readers may recall that in 2023, the U.S. Federal Trade Commission announced that Amazon’s “secret pricing algorithm,” internally known as “Project Nessie,” may have generated over $1 billion in additional profits.

Is Amazon a Buy, Sell, or Hold?

Amazon stock commands a Strong Buy rating on Wall Street based on a unanimous consensus of 42 Buy ratings over the past three months. AMZN’s average stock price target of $296.10 implies almost 20% upside over the next 12 months.

See more AMZN analyst ratings

Amazon Reignites Growth Across All Divisions

Amazon has effectively emerged from its post-pandemic slowdown with renewed strength. AWS’s 20% growth, fueled by surging AI demand, a robust subscription base, and a high-margin advertising segment expanding 24% year-over-year, all point to a company firing on all cylinders. Meanwhile, Amazon’s retail operations have become leaner and more profitable, underscoring a successful shift toward efficiency-driven growth.

The company’s massive capital expenditure program represents a bold investment in the future—one that appears poised to deliver substantial long-term returns. Based on a Sum-of-the-Parts (SOTP) valuation using conservative multiples, my analysis supports a $295 price target, reinforcing a “Buy” rating for long-term investors seeking durable, multi-engine growth.