Amazon.com Amazon (AMZN) is heading into its second-quarter earnings report with some serious tailwinds, according to Bank of America. The brokerage just raised its estimates for the e-commerce and cloud giant, betting that Amazon Web Services (AWS) growth will be even stronger than expected thanks to surging demand for artificial intelligence.

BofA reiterated its Buy rating and $310 price target, arguing that Amazon's improving AI positioning, accelerating AWS growth, and continued momentum in generative AI services could be major catalysts for the stock in the second half of 2026. The firm now expects Amazon to report Q2 revenue of $198.8 billion and operating income of $24.1 billion, both above Wall Street's consensus estimates of $196.8 billion and $23.6 billion, respectively.

The key upgrade? BofA raised its AWS revenue growth forecast to 33% year over year, up from a prior estimate of 31%. The driver: growing demand from Anthropic, OpenAI-powered Bedrock services, and broader enterprise AI adoption. That's a big deal, because AWS is Amazon's profit engine and the market's favorite metric to watch.

What to Watch in the Report

For the third quarter, analysts expect Amazon to guide revenue between $200.5 billion and $205.5 billion, roughly in line with Street expectations. But there's a twist: an earlier-than-usual Prime Day will likely shift some sales into Q2, creating a headwind for Q3 retail comparisons. So don't freak out if the retail segment looks a bit soft.

BofA says investors should focus less on headline earnings and more on AWS growth, cloud margins, AI backlog expansion, and commentary around capital spending. The firm believes Amazon's cloud business continues to strengthen relative to competitors, supported by Bedrock adoption, Trainium chips, and growing AI workloads.

AI Spending and the Anthropic Factor

Here's where it gets interesting. BofA says Amazon could increase its 2026 capital expenditure outlook to about $210 billion, driven by higher memory costs and additional AI infrastructure investment. That might spook some investors in the short term, but analysts argue that stronger cloud demand and improving AI monetization should more than offset those concerns over time.

Then there's Amazon's expanding relationship with Anthropic. BofA estimates that Anthropic-related workloads alone could contribute more than $1.5 billion in sequential AWS revenue growth during the quarter. And Amazon's stake in the AI startup? That could generate a significant mark-to-market gain. Not bad for a side bet.

Wall Street's Take

Amazon is scheduled to report Q2 results on July 30. Wall Street expects earnings of $1.82 per share, up from $1.68 a year ago, on revenue of $196.02 billion, compared with $167.70 billion in the prior-year quarter. The stock trades at about 29.6 times forward earnings, and analysts maintain a Buy consensus rating with an average price target of $320.10.

Recent analyst actions include:

• Wells Fargo reiterated Overweight and raised its price target to $322 on July 21.
• KeyBanc maintained Overweight and increased its price target to $335 on July 16.
• Wedbush reiterated Outperform with a $293 price target on July 16.

Amazon ETF Exposure

Amazon is a major holding in several ETFs, including the iShares Russell Top 200 Value ETF (IWX) at 8.32%, the Invesco Nasdaq Internet ETF (PNQI) at 9.89%, and the ClearBridge Large Cap Growth ESG ETF (LRGE) at 9.29%. Large fund flows into or out of these ETFs can move Amazon's share price given its hefty weighting.

Price Action

Amazon shares were down 1.47% at $243.91 at the time of publication on Wednesday. The stock has been volatile, but with earnings just around the corner, all eyes are on AWS growth and AI monetization.