UBS on Amazon: Street’s AWS margin estimates for 2027 are too low

Investing.com -- UBS raised its price target on Amazon to $348 from $318 and reiterated its Buy rating ahead of third-quarter results on Oct. 29, telling investors that Wall Street is underestimating Amazon Web Services margins. Still guessing which stocks will beat the market? Our AI portfolio updates monthly and is outperforming the S&P 500 by 118%. See this month's list » Analyst Stephen Ju said the stock's lack of follow-through after second-quarter results reflects investors pricing in higher 2027 capex of more than $300 billion, which would leave free cash flow at zero or negative. UBS forecasts a 46% AWS operating margin in 2027, compared with consensus of 38%. Ju acknowledged pushback that AI workloads carry lower margins.