Key Takeaways
- Evercore ISI maintains Outperform rating on Amazon (AMZN) with a $285 price target
- AWS expected to generate $163B revenue in 2026 (27% increase) and $214B in 2027 (31% increase)
- Evercore designates Amazon as its top large-cap investment opportunity for 2026, with shares at a 3-year valuation low
- Company-wide revenue and operating income projections increased 2–3%, positioning 4–5% above consensus
- Capital spending anticipated to approach ~$250B by 2027, potentially generating ~$10B annual free cash flow deficits
Evercore ISI’s Mark Mahaney reinforced his Outperform stance on Amazon.com (AMZN) this Wednesday, maintaining his $285 price objective. With shares hovering around $208.76, this target represents approximately 37% potential appreciation.
Mahaney designated Amazon as his “premier large-cap long position for 2026,” pointing to attractive valuation levels, robust cloud expansion, and emerging business ventures as primary catalysts.
This assessment followed a comprehensive evaluation of Amazon Web Services, the tech giant’s cloud computing arm. Evercore’s updated forecasts anticipate AWS generating $163 billion in revenue during 2026, marking 27% annual growth, before accelerating to $214 billion in 2027 with 31% expansion.
Regarding profitability metrics, Evercore anticipates AWS operating margins will reach 34% in 2026, with a modest decline to 32% in 2027. These figures demonstrate impressive efficiency and underscore the cloud segment’s expanding scale.
Evercore simultaneously upgraded its overall Amazon projections. Both revenue and operating income estimates received 2–3% increases, positioning them 4–5% above prevailing Street expectations. This represents a substantial divergence.
Current Valuation and Growth Potential
Mahaney’s core thesis centers on Amazon’s attractive current valuation—particularly when measured against its historical trading range. Shares are currently trading near a three-year low on a price-to-earnings basis, with a present P/E of 29.11 and a PEG ratio of 0.98. This PEG metric indicates the market may be undervaluing the company’s forward growth trajectory.
Evercore also highlighted emerging corporate initiatives, including Project Leo and Perishable Checkout, as additional catalysts that could deliver more substantial contributions throughout 2026.
BofA Securities similarly maintains a Buy recommendation on the stock, establishing a $275 price objective, following Amazon’s recent expansion of 1-hour and 3-hour delivery services across numerous U.S. metropolitan areas.
Capital Expenditure Concerns
The primary headwind involves capital allocation. Evercore anticipates Amazon’s capital expenditures will escalate to approximately $250 billion by 2027, representing a considerable investment. The firm forecasts roughly $10 billion in free cash flow deficits for both 2026 and 2027 stemming from this spending.
Capex intensity—calculated as capital expenditure relative to total revenue—is projected to crest in 2026, though Evercore acknowledged the possibility of extension into 2027. This represents a tangible constraint on near-term cash generation capacity.
Neverthstanding, Mahaney contends this risk is adequately reflected in current share prices, with the overall risk-reward profile remaining attractive.
On the corporate finance front, Amazon recently secured $36.9 billion through a multi-tranche debt issuance, while also concluding 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-driven automation technologies.
According to current analyst coverage, 40 of 43 analysts tracking AMZN maintain Buy ratings, with a consensus price target of $280.00 per share.
