"Wells Fargo's thesis rests on two pillars: unchanged 2026 capital expenditure guidance removes a key overhang that had weighed on sentiment, and accelerating AWS revenue is driving positive free cash flow revisions for the first time in the last four quarters."
"AWS delivered $35.6 billion in Q4 2025 revenue, growing 24% year over year, its fastest growth in 13 quarters, now running at a $142 billion annualized run rate with a 35% operating margin."
"Operating cash flow grew 20% to $139.51 billion in 2025, but capital expenditures surged 59% to $131.82 billion, compressing reported free cash flow sharply."
"CEO Andy Jassy stated: 'We are monetizing capacity as fast as we can install it. We have deep experience understanding demand signals in the AWS business and then turning that capacity into strong return on invested capital.'"
Wells Fargo increased Amazon's price target to $305, maintaining an Overweight rating and naming it a top Internet pick for 2026. The analysis highlights AWS revenue acceleration and positive free cash flow revisions as critical factors. AWS reported $35.6 billion in Q4 2025 revenue, a 24% year-over-year increase. Operating cash flow grew 20% to $139.51 billion, but capital expenditures surged 59%, impacting free cash flow. Amazon's capital expenditure guidance for 2026 is approximately $200 billion, primarily for AI infrastructure.
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