Amazon stock has lost about 8% in a month, despite ending October with a very strong earnings report. The drop in the stock’s value is due to artificial intelligence stocks being hit with a sell-off. However, it’s worth noting that the stock’s drop isn’t as severe as Nvidia‘s, which has lost about 13% in the past month.
The company’s AI push is only intensifying, as evident from the announcements made at its Amazon Web Services (AWS) re:Invent conference.
Bank of America believes AWS revenue growth will reach 25%.
Photo by Marques Thomas on Unsplash
AWS re:Invent conference key announcements
Amazon (AMZN) unveiled three new frontier agents: the Kiro autonomous agent, AWS Security Agent, and AWS DevOps Agent.
- Kiro autonomous agent is a virtual developer that maintains context and learns over time.
- AWS Security Agent is a security consultant for app design, code reviews, and penetration testing.
- AWS DevOps Agent is intended to help with resolving and proactively preventing incidents.
Amazon launched Trainium3 UltraServers powered by the new Trainium3 chip.
According to the company, this new generation of UltraServers delivers up to 4.4 times more compute performance, 4 times greater energy efficiency, and almost 4 times more memory bandwidth than the previous Trainium2-based models.
Trainium3 UltraServers scale up to 144 Trainium3 chips, delivering up to 362 FP8 PFLOPs with 4x lower latency, making it possible to train larger models faster and serve inference at scale.
The company stated that its customers, including Anthropic, Karakuri, Metagenomi, NetoAI, Ricoh, and Splash Music, are able to reduce training and inference costs by up to 50% with Trainium, while Decart is achieving 4x faster inference for real-time generative video at half the cost of GPUs, and Amazon Bedrock is already serving production workloads on Trainium3.
Amazon announced AWS AI Factories, a new service that provides enterprises and governments with dedicated AWS AI infrastructure deployed in their own data centers.
AWS AI Factories offer dedicated infrastructure that combines the latest Nvidia GPUs, Trainium chips, AWS AI services, and AWS networking.
Amazon expanded its Nova portfolio with four new models and launched Nova Forge, an “open training” service that enables organizations to build their custom model variants with Nova.
Bank of America believes AWS revenue growth will reach 25%
Bank of America analyst Justin Post and his team attended the re:Invent conference in Las Vegas, and following the announcements, updated their opinion on the Amazon stock.
For Post, the most significant “change” at AWS was increased collaboration with Nvidia on future Trainium hardware. He said that AWS is already developing Trainium4 chips, which will use Nvidia’s NVLink Fusion racks to connect multiple AI components, thereby making systems faster and more efficient.
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Analysts said that feedback from AWS meetings suggests AI is unlocking new Cloud demand. The team believes AWS revenue growth can accelerate toward 25% (from 20% in Q3 2025) as Amazon adds incremental capacity.
The team provided updated revenue estimates for 2025, 2026, and 2027 of $716 billion, $801 billion, and $885 billion, respectively. Their EPS estimates for 2025, 2026, and 2027 are $7.25, $7.75, and $9.28, respectively.
In a research note shared with TheStreet, Post reiterated a buy rating and the target price of $303, based on his sum-of-the-parts analysis that values AWS at 10x 2027 sales, first-party retail at 1.1x, third-party retail at 2.5x, and advertising at 5.0x.
Post’s price target implies 3.7 times blended price to sales ratio, 13 times 2027 EBITDA, and 33 times 2027 EPS.
Analysts noted downside risks factor for Amazon:
- Increasing competition from offline and local retailers
- AWS client cost optimization impact on revenues and margins
- Regulatory pressure on the third-party marketplace
They also noted that the stock has been subject to heavy volatility in the past, based on margin trends, and this volatility could increase due to economic uncertainty.