Bank of America Securities noted that Amazon's (AMZN.US) cloud computing service, AWS, has signed a $38 billion computing resources agreement with OpenAI, effective immediately. AWS aims to fully deploy all computing power by the end of 2026. The firm believes the agreement will have a moderate impact on Amazon’s revenue in 2026 but anticipates significant growth in revenue starting in 2027.
The firm also believes that this agreement reflects AWS’s expansion in computing capacity, which will position it favorably to secure larger-scale cloud contracts, accelerating revenue growth. Additionally, AWS’s dual AI chip strategy can meet customer demands for varying performance and cost requirements.
The firm maintains a 'Buy' rating for Amazon, with a target price of $303. It expects the next potential catalyst for AWS to be the re:Invent conference in December, where AWS may showcase advancements in Trainium, Nova, and newly added partners.
