Amazon.com Inc (NASDAQ:AMZN)’s cloud unit, AWS, could see revenue growth above Street expectations thanks to significant capacity expansion, according to Bank of America analysts.
“Based on capex disclosures and AWS commentary, we estimate AWS will add approximately 15 gigawatts of capacity by 2027,” the analysts forecast. They added that this expansion implies “’26/’27 AWS revenue growth potential of 27%/28%, above Street” estimates.
AWS has more than doubled its power capacity since 2022, adding 3.9 gigawatts in 2025 alone, with plans to double capacity again by 2027, the analysts noted.
They also highlighted that recent agreements with OpenAI and the US government suggest Amazon is well positioned to compete for AI-related workloads.
Assuming stable revenue per gigawatt added, Bank of America estimates AWS could generate $164 billion in 2026 and $209 billion in 2027, representing potential upside of 2% and 5% versus consensus.
“While revenue yields on capacity could be impacted by shifts to AI workloads and competitive pricing, we think favorable demand trends will support revenues,” the analysts wrote.
The note also highlighted risks. Hyperscalers are expected to spend $1.2 trillion on capex over the next two years, which could raise construction costs and result in industry overcapacity.
“The unprecedented capacity build will elevate input costs and could eventually drive more competitive pricing, thus pressuring industry revenues,” the analysts wrote.
Despite these risks, Bank of America maintained a Buy rating on Amazon shares, citing accelerating AWS growth, adoption of Amazon’s Trainium chips, and new AI deals as potential catalysts. “Any improvements in Amazon’s proprietary LLM development could also be constructive for the stock,” the analysts wrote.
The firm set a price target of $275, above current levels of about $209.