Citi Research has raised Amazon's price target to $285 per share, forecasting strong AI revenue growth from its strategic partnership with OpenAI, despite ongoing investor concerns about AI investment costs.
Citi's Upgraded Outlook
- Price target increased from $265 to $285, implying approximately 27% upside from recent closing prices.
- Reiterated a buy rating for Amazon stock.
- Analyst Ronald Josey cited continued AI demand and revenue contributions from partnerships with OpenAI and Anthropic.
OpenAI Partnership Details
- In late February, Amazon announced a strategic deal with OpenAI, including a pledge to invest up to $50 billion in AI.
- Amazon Web Services (AWS) becomes the exclusive third-party cloud distributor for OpenAI Frontier, an enterprise platform for AI agents.
- This aligns with similar multibillion-dollar AI infrastructure commitments from tech giants like Meta, Oracle, Google, and Microsoft.
AWS Revenue Growth Projections
- AWS revenue expected to grow 28% year-over-year in Q1 2026, 29% for full-year 2026, and accelerate to 37% in 2027.
- AI revenue projected to account for 58% of AWS's incremental revenue in 2026 and 72% in 2027.
- AWS compute capacity is on track to double to about 24 gigawatts by 2027 to meet demand.
Analyst Consensus and Stock Performance
- Of 69 analysts covering Amazon, 65 have buy or strong buy ratings, indicating broad market confidence.
- Citi's price target is below the consensus average, reflecting some caution.
- Amazon shares have declined 10% since the start of the year amid investor worries over AI infrastructure spending and return on investment.