Key Takeaways
- Evercore ISI maintains Outperform rating on Amazon (AMZN) with $285 price target
- AWS revenue forecasted to reach $163B in 2026 (27% expansion) and $214B in 2027 (31% expansion)
- Amazon designated as Evercore’s premier large-cap long position for 2026, currently trading at 3-year P/E trough
- Total revenue and operating income projections increased 2–3%, positioned 4–5% above consensus estimates
- Capital expenditures anticipated to approach ~$250B by 2027, with projected annual free cash flow deficits of ~$10B
Evercore ISI analyst Mark Mahaney maintained his Outperform rating on Amazon.com (AMZN) this Wednesday, reaffirming his $285 price target. With shares trading around $208.76, this valuation suggests approximately 37% potential upside.
Mahaney designated Amazon as his premier large-cap long position for 2026, highlighting valuation metrics, cloud computing expansion, and emerging business ventures as primary catalysts driving his bullish stance.
This recommendation followed an updated assessment of Amazon Web Services, the company’s cloud computing division. Evercore currently forecasts AWS revenue reaching $163 billion in 2026, representing 27% year-over-year expansion, before advancing to $214 billion in 2027 with 31% growth.
Regarding profitability, Evercore anticipates AWS operating margins of 34% in 2026, with a modest decline to 32% in 2027. These figures demonstrate robust performance and underscore the ongoing scalability of the cloud business.
Evercore has elevated its comprehensive Amazon projections as well. Revenue and operating income estimates received 2–3% increases, positioning them 4–5% above prevailing Wall Street consensus. This represents a substantial differential.
Valuation Metrics and Growth Potential
A core component of Mahaney’s thesis centers on Amazon’s current attractive valuation relative to historical norms. The stock trades near a three-year low on a price-to-earnings basis, with a present P/E ratio of 29.11 and a PEG ratio of 0.98. This PEG metric indicates the market may be undervaluing anticipated growth trajectories.
Evercore highlighted emerging company projects, including Project Leo and Perishable Checkout, as potential catalysts that could deliver more substantial contributions throughout 2026.
BofA Securities maintains a Buy rating on the shares, assigning a $275 price target, following Amazon’s recent introduction of 1-hour and 3-hour delivery services across numerous U.S. metropolitan areas.
Capital Spending Presents Near-Term Challenge
The primary concern involves investment outlays. Evercore anticipates Amazon’s capital expenditures climbing to approximately $250 billion by 2027, representing considerable deployment. The firm forecasts roughly $10 billion in free cash flow deficits for both 2026 and 2027 stemming from these investments.
Capex intensity—calculated as capital expenditures relative to total revenue—is projected to reach its apex in 2026, though Evercore acknowledged this peak could persist through 2027. This dynamic creates genuine pressure on immediate cash generation capabilities.
Mahaney’s perspective suggests this risk factor has already been incorporated into current share pricing, with the overall risk-reward profile remaining attractive.
On the broader corporate landscape, Amazon recently secured $36.9 billion through a debt issuance spanning various maturities, while completing a €14.47 billion euro-denominated note transaction. Jeff Bezos is separately engaged in discussions to raise $100 billion for a new investment vehicle focused on manufacturing enterprises and AI-powered automation technologies.
According to the latest analyst coverage, 40 of 43 analysts following AMZN maintain Buy ratings, with the consensus price target established at $280.00 per share.
