Amazon.com, Inc. (NASDAQ:AMZN) shares climbed Monday after the company announced a $38 billion multi-year partnership with OpenAI for AWS to provide computing infrastructure to support OpenAI's artificial intelligence workloads.
Wedbush analysts Dan Ives and Scott Devitt raised the price target on Amazon stock from $330 to a Street high of $340 based on the new partnership. Here's a look at what they highlighted in the note.
- See the real-time price action for AMZN here.
The analysts noted that the collaboration will see OpenAI initially using AWS's existing data centers, with Amazon planning to expand dedicated infrastructure to meet future needs.
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The entire planned capacity is expected to be operational by the end of 2026, and the partnership is designed to continue growing over the next seven years.
Wedbush sees the deal as a natural progression following Amazon's recent partnership with Anthropic, further strengthening Amazon's role as a leader in AI cloud services.
AWS has already reached an annual run rate of more than $130 billion, with strong year-over-year growth driven by increased AI and core service demand.
Amazon has focused heavily on expanding AWS's capacity, and the company is on track to double it by 2027 due to robust demand.
The analyst pointed to increasing demand for AWS and see the trend continuing.
"We are encouraged by the implied level of demand in the coming quarters given the pace of backlog growth and a higher capex guide for 2025. We think momentum will continue for the segment," Wedbush analysts said in the note.
Wedbush's new price target of $340 is the highest on the Street and implies 33% upside for Amazon shares.
AMZN Price Action: Amazon shares closed up 4% at $254 on Monday.
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