UBS Sets Bold Amazon Stock Target Ahead of Earnings

Amazon AMZN stock could be substantially undervalued heading into its October 29 earnings, according to UBS, which argues that Wall Street is underestimating the profitability of its cloud computing business. The bank raised its price target to $348 from $318, implying roughly 40% upside, as it sees stronger Amazon Web Services (AWS) margins offsetting concerns over the company’s massive artificial intelligence spending.

UBS analyst Stephen Ju reiterated his Buy rating, arguing that investor skepticism surrounding Amazon’s capital expenditures has overshadowed its improving earnings potential.

Those concerns aren’t insignificant.

Wall Street is grappling with the possibility that Amazon’s capital expenditures could exceed $300 billion in 2027, potentially pushing free cash flow toward zero or negative territory.

However, Ju believes analysts are underestimating how much profit AWS can generate from its expanding AI infrastructure.

UBS forecasts AWS operating margins of 46% in 2027,…