BofA Securities analyst Justin Post reiterated a Buy rating on Amazon.com Inc (NASDAQ:AMZN) and kept his $275 price target, arguing that Amazon Web Services‘ aggressive capacity expansion could drive upside despite near-term concerns around AI spending.
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AWS Capacity Buildout Gains Momentum
Post noted AWS doubled power capacity since 2022 and added 3.9 gigawatts in 2025 (including 1.2 gigawatts in the fourth quarter).
The analyst said Amazon plans to double AWS capacity again by 2027, adding to AWS revenue growth, accelerating from 17% year-over-year in the second quarter of 2025 to 24% in the fourth quarter of 2025.
Revenue Upside From Power Expansion
Using Amazon’s commentary and historical capex data, he estimated AWS power capacity could climb to more than 31 gigawatts by end-2027 from about 15 gigawatts in the third quarter of 2025.
Assuming AWS continues to generate about $5.4 billion in incremental revenue per added gigawatt, Post projected AWS could reach about $164 billion in revenue in 2026 and $209 billion in 2027, implying 2% and 5% upside versus Street estimates of $161 billion and $199 billion.
Risks, Spending Surge and Sentiment Outlook
The analyst warned that rising build costs and an eventual industry overbuild could pressure those projections.
He estimated hyperscalers may spend $1.2 trillion in capex over the next two years, which could lift construction costs and ultimately push cloud pricing more competitive.
Despite Amazon’s stock falling 6% since its fourth-quarter earnings, Post said sentiment could improve if AWS’s growth re-accelerates, Trainium adoption expands, and Amazon signs more AI capacity deals.
AMZN Price Action: Amazon stock was up 0.42% at $209.21 at publication on Wednesday.
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