Amazon’s Next Growth Surge: Why Morgan Stanley’s Tariff Shift Signals a Major Buy Opportunity
Amazon (AMZN) has been quietly powering ahead, and now, with a “more manageable” tariff environment, the e-commerce and cloud giant is poised for an even bigger leap. Morgan Stanley just raised its price target for Amazon from $250 to $300, signaling an impressive 35% upside from recent closing prices. This move isn’t just about a number—it’s a reflection of a fundamental shift in the macroeconomic landscape that investors need to understand and act on.
The Tariff Twist: Why It Matters More Than You Think
Back in mid-April, when tariffs on Chinese imports hit a staggering 145%, Morgan Stanley’s Brian Nowak slashed Amazon’s earnings forecasts, anticipating a tough road ahead. But President Trump’s recent decision to dial down tariffs to 55% has dramatically altered the playing field. Nowak has responded by boosting Amazon’s earnings estimates by 9% for fiscal 2026 and 6% for fiscal 2027. This is a clear signal: the easing of trade tensions is not just a headline—it’s a catalyst for growth.
AWS and Anthropic: The Cloud’s Hidden Powerhouses
Beyond tariffs, the real story lies in Amazon Web Services (AWS), which continues to accelerate as supply chain constraints ease. Notably, Amazon’s investment in Anthropic, an AI startup, is expected to almost triple its contribution to AWS growth. Nowak projects Anthropic’s revenue to hit $10 billion in 2026 and $19 billion in 2027, operating at a robust 60% gross margin. This could push Anthropic’s contribution to AWS growth above 150 basis points—a game-changer for Amazon’s cloud segment.
What This Means for Investors
Amazon’s stock has already outperformed, rising over 20% in the past three months versus the S&P 500’s 17% gain. Yet, with Morgan Stanley’s bullish outlook and 70 out of 73 analysts rating it a strong buy or buy, the consensus is clear: Amazon still has room to run.
Here’s the actionable insight for investors and advisors:
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Reassess Growth Portfolios: If tariffs and supply chain issues have kept you cautious on Amazon, now is the time to revisit that stance. The reduced tariff burden and AWS’s AI-driven growth are powerful tailwinds.
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Focus on Cloud & AI Exposure: Amazon’s AWS segment, especially with AI integrations like Anthropic, represents a high-margin growth engine. Consider overweighting cloud and AI-related stocks within your portfolio to capture this secular trend.
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Look Beyond Near-Term Volatility: While geopolitical risks remain, the structural improvements in Amazon’s business model suggest a longer-term growth trajectory that can withstand short-term shocks.
A Unique Take: The AI Factor as a Differentiator
Unlike many other tech giants, Amazon’s integration of AI through Anthropic isn’t just an add-on; it’s becoming a core revenue driver. Recent data from McKinsey highlights that companies leveraging AI in cloud services can boost operating margins by up to 15%. Amazon’s strategic positioning here could translate into sustained margin expansion, a factor often overlooked by the broader market.
What’s Next?
Investors should watch for Amazon’s upcoming earnings reports for signs of AWS and Anthropic revenue acceleration. Additionally, monitor any further tariff developments or trade negotiations that could impact cost structures. Given the current trajectory, Amazon could well be setting the stage for a multi-year growth cycle fueled by innovation and improved global trade dynamics.
In Summary
Morgan Stanley’s tariff-driven upgrade of Amazon is more than a price target revision—it’s a call to action. For investors seeking growth in a complex global environment, Amazon’s blend of e-commerce dominance, cloud innovation, and AI integration offers a compelling opportunity. Stay ahead of the curve by adjusting your portfolios now, focusing on the structural themes powering Amazon’s future.
Sources:
- Morgan Stanley Analyst Report, June 2024
- LSEG Analyst Consensus Data, June 2024
- McKinsey & Company, “The State of AI in 2024” Report
Source: Lower tariffs can help Amazon rally another 35%, Morgan Stanley says