Sometimes the market gets spooked by noise instead of signal. That's JPMorgan's take on Amazon.com Inc. (AMZN), where analyst Doug Anmuth sees the recent post-earnings pullback as a prime buying opportunity that completely misses what's happening in the company's cloud and artificial intelligence business.
Anmuth maintained his Overweight rating on Amazon with a $305 price forecast, calling it the firm's top pick heading into the new year. His thesis? Wall Street is overlooking the accelerating momentum at Amazon Web Services, which just posted its fastest growth rate in nearly three years during the third quarter.
What's Actually Behind the Weakness
The analyst points to a few culprits for the stock's recent slide. First, there's market chatter around Amazon's $15 billion debt raise creating some technical pressure. Then there's growing competition anxiety as Anthropic expands partnerships with Nvidia Corp. (NVDA) and Microsoft Corp.'s (MSFT) Azure. And finally, investors are getting antsy about the timeline for Amazon's next-generation Trainium 3 AI chip.
But here's where Anmuth thinks the narrative shifts: Amazon's re:Invent conference next week should provide the clarity investors are craving. He expects major updates on Trainium timing and performance, growth metrics tied to Anthropic, and details on Amazon's broader AI infrastructure strategy.
On the chip front, Amazon plans to preview Trainium 3 by late 2025, with meaningful volume arriving in early 2026. The company claims this next generation will deliver roughly 40% better price-performance than Trainium 2, which already saw revenue surge more than 150% quarter-over-quarter. Sure, some investors worry that Trainium lags behind Nvidia GPUs and Google TPUs, but Anmuth expects the conference to showcase clearer performance comparisons and strategies to broaden customer adoption.
The Anthropic and OpenAI Catalysts
Amazon's partnership with Anthropic is getting significantly deeper through something called Project Rainier. AWS is doubling Anthropic's access to Trainium 2 chips from roughly 500,000 to over one million by year-end. This isn't just a nice-to-have expansion. Anmuth believes this move will support AWS revenue acceleration in the fourth quarter and throughout 2026, potentially generating around $9 billion in annual AWS revenue from this initiative alone.
Then there's the freshly announced OpenAI partnership, which includes a massive $38 billion, seven-year commitment to scale workloads on AWS infrastructure. OpenAI plans to deploy substantial Nvidia GPU capacity through AWS and expand even further in 2027. That's the kind of long-term, high-value commitment that separates temporary partnerships from strategic anchors.
The demand picture looks healthy across the board. AWS backlog grew 22% year-over-year to $200 billion, and here's the kicker: Amazon booked more business in October alone than in the entire third quarter. Anmuth forecasts AWS growth to accelerate in 2026, potentially outpacing Microsoft Azure in quarterly revenue gains starting in early 2026.
Why This Matters Now
Anmuth's view is that clearer visibility into AWS AI roadmaps, Trainium capabilities, the Anthropic expansion, the OpenAI deal, and power-scaling commitments should ease investor concerns and drive stronger stock performance heading into year-end and 2026. The post-earnings dip, in his assessment, represents a disconnect between short-term market anxiety and the fundamental trajectory of Amazon's cloud business.
For the fourth quarter, the analyst projected revenue of $212.67 billion and adjusted earnings per share of $2.76.
Price Action: Amazon shares traded up 0.44% at $230.67 at the time of publication on Wednesday.
