Wall Street raises Amazon price targets after strong first quarter earnings

Friday 01 May 2026 - 07:19

By: Dakir Madiha

Wall Street raises Amazon price targets after strong first quarter earnings

Amazon reported first quarter results that exceeded expectations across revenue, profit, and operating income, prompting a broad wave of price target increases from Wall Street analysts. The performance was driven by strong growth in cloud computing and improved operating margins, even as investor concerns over heavy capital spending weighed on the stock in after-hours trading.

The company posted net sales of $181.5 billion, up 17 percent year over year and above analyst estimates of $177.3 billion. Earnings per share reached $2.78, significantly higher than the expected $1.64, supported in part by $16.8 billion in pre-tax gains linked to its investment in Anthropic. Operating income rose 30 percent to $23.9 billion, also beating forecasts and signaling improved efficiency across core business segments.

Amazon Web Services delivered one of the strongest performances in the report. The cloud division generated $37.6 billion in revenue, marking a 28 percent annual increase and surpassing projections of $36.7 billion. This represents AWS’s fastest growth rate in 15 quarters. Chief executive Andy Jassy noted that the $2 billion sequential increase from the previous quarter was the largest fourth quarter to first quarter gain in the unit’s history, bringing AWS to an annualized revenue run rate of $150 billion.

Analysts responded by raising their price targets, with estimates now ranging between $310 and $355. Several firms cited accelerating AWS growth and sustained demand for cloud and artificial intelligence services as key drivers. The upward revisions reflect renewed confidence after earlier concerns that AWS was losing ground to competitors in the cloud market.

Despite the strong results, investor sentiment remained cautious. Amazon shares declined in after-hours trading as markets focused on the company’s aggressive capital expenditure plans. During the quarter, Amazon spent $44.2 billion on infrastructure, including artificial intelligence systems, data centers, and custom chips. The company is targeting roughly $200 billion in annual capital spending, raising concerns about long-term cash flow pressure.

Free cash flow over the past 12 months dropped sharply to $1.2 billion, compared with $25.9 billion a year earlier. The decline was driven by a $59.3 billion increase in capital expenditures. This shift highlights the scale of Amazon’s investment cycle as it expands its AI and cloud infrastructure.

Looking ahead, Amazon expects second quarter revenue between $194 billion and $199 billion, representing growth of 16 percent to 19 percent. However, the midpoint of its operating income forecast, at $22 billion, falls slightly below market expectations of $22.9 billion. This cautious outlook has contributed to investor hesitation despite the company’s strong quarterly performance.

The results mark a reversal from earlier skepticism about AWS growth. Concerns had emerged that competitors were eroding Amazon’s lead in cloud computing, but the latest figures suggest renewed momentum. The stock had already gained about 26 percent in April before the earnings release, reflecting rising expectations that the company could sustain growth in a competitive and capital-intensive environment.