UBS raised its price target on Amazon AMZN from $318 to $348 and kept a Buy rating ahead of the company’s third-quarter results on October 29. Amazon shares rose 0.92% in premarket.
The firm lifted its 2027 capital expenditure estimate to more than $300 billion from about $250 billion, and expects the higher spending to leave free cash flow at zero or negative. Even so, UBS forecasts a 2027 AWS operating margin of 46%, well above the 38% consensus, with the unit adding about $80 billion of incremental revenue against roughly $20 billion of extra depreciation and amortization.
UBS argued that holding Amazon’s operating margin at the second quarter’s level of about 39% would require $29 billion of incremental selling, general and administrative spending, three times the pace planned for 2026. The firm values Amazon at 18x its 2027 EPS estimate and expects investors to raise margin forecasts as the company reports over the coming quarters.
