Amazon has long derived a disproportionate share of its profit from its cloud division, Amazon Web Services (AWS).
A growing number of Wall Street analysts are now projecting AWS will exceed consensus growth estimates when CEO Andy Jassy reports second-quarter results on July 30, The Motley Fool notes.
The consensus estimate calls for $196.71 billion in total second-quarter revenue and earnings of $1.82 per share, according to analyst forecasts tracked by TipRanks.
Several major banks are signaling that Wall Street has set the bar too low on the cloud side of the business.
Bank of America sees AWS cloud growth reaching 33%
Bank of America raised its AWS revenue growth forecast to 33% year over year for the second quarter, up from a prior estimate of 31%, according to Benzinga.
The firm also projects Amazon will report total revenue of $198.8 billion and operating income of $24.1 billion, both above the Street consensus of $196.8 billion and $23.6 billion, respectively.
The bank cited growing demand from Anthropic, OpenAI-powered Bedrock services, and broader enterprise adoption of artificial intelligence as catalysts for the accelerated cloud growth, Benzinga reported.
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Bank of America reiterated its buy rating and $310 price target on the stock, the report noted.
KeyBanc analyst Justin Patterson raised his price target from $325 to $335 and now expects AWS to grow 31% year over year through both 2026 and 2027, TipRanks reported.
Goldman Sachs analyst Eric Sheridan also raised his target to $335, forecasting AWS growth of about 33% this year and close to 35% in 2027, TipRanks noted.
Amazon’s first quarter showed AWS already accelerating
The bullish analyst revisions are not coming from speculation alone, because the first quarter results gave them a foundation to build on.
AWS generated $37.6 billion in revenue during the first three months of 2026, a 28% year-over-year increase that marked the division’s fastest growth in 15 quarters, according to Amazon’s earnings release.
That cloud segment accounted for 21% of Amazon’s total first-quarter sales but generated 59% of the company’s operating profit, highlighting just how much the bottom line depends on Jassy’s cloud business.
Amazon CEO Andrew Jassy said cloud revenue surged at its fastest pace in nearly four years.
Growth continued to accelerate, up 28% year over year, the fastest growth rate in 15 quarters, up $2 billion quarter over quarter, the largest Q4 to Q1 AWS revenue increase ever.
AWS posted $14.2 billion in operating income during the first quarter at a 37.7% operating margin, up from $11.5 billion in the same period a year earlier, the earnings release showed.
Amazon’s total operating income reached $23.9 billion at a 13.1% margin, which Jassy described as the highest operating margin in the company’s history.
The company guided second quarter revenue between $194 billion and $199 billion, with operating income expected in a range of $20 billion to $24 billion, the release confirmed.
How custom chips and Anthropic are driving AWS growth
Behind the headline revenue figures sits a custom silicon business that has become a significant contributor to Amazon’s cloud momentum.
Amazon’s chips division, which includes the Graviton, Trainium, and Nitro product lines, surpassed a $20 billion annualized revenue run rate in the first quarter while growing at triple-digit percentages year over year, Jassy noted in his 2025 annual letter to shareholders.
Trainium2 chips delivered about 30% better price performance than comparable graphics processing units and have largely sold out, while the newer Trainium3 chips began shipping at the start of 2026 with another 30% to 40% improvement, Jassy wrote.
Even Trainium4, which is still roughly 18 months from broad availability, already has a significant portion of its capacity reserved by clients, he added.
Bank of America estimates that Anthropic-related workloads alone could contribute more than $1.5 billion in sequential AWS revenue growth during the second quarter, Benzinga reported.
That figure underscores how Amazon’s investment in the AI startup is translating into measurable cloud demand, not just paper gains on its balance sheet.
What to watch beyond the AWS headline revenue beat
The July 30 report will produce a top-line revenue number and an earnings-per-share figure, but analysts have flagged several additional metrics as more consequential.
Bank of America analysts said investors should pay closer attention to AWS operating margins, capital expenditure guidance for the remainder of the year, AI backlog expansion, and management commentary around Trainium adoption, Benzinga reported.
The stock currently carries a strong buy consensus rating from 46 analysts as of July 22, with an average price target of about $319 to $320 that implies roughly 29% upside from its recent trading price near $244, TipRanks data showed.
Amazon shares have gained about 7.6% year to date and trade at approximately 29 times forward earnings.
Jassy’s ability to deliver the blowout that analysts expect hinges on how much of that contracted computing capacity has already converted into recognized revenue.
