Goldman Sachs maintains its Buy rating on Amazon.com Inc. and raises its 12-month price target to $375

Overview

This is a Goldman Sachs review of Amazon.com Inc.’s Q2’26 results. The report’s core conclusion is that AWS revenue growth, operating margins, and AI-related business momentum continue to demonstrate returns on the company’s capital investments, while e-commerce, the Prime ecosystem, quick commerce, and advertising also maintain healthy growth. Goldman Sachs reiterates its Buy rating and raises its 12-month price target from $335 to $375.

Core views

Goldman Sachs believes AMZN has the potential for multi-year compound revenue growth and operating margin expansion. AWS benefits from enterprise cloud migration and increased Gen AI workloads; e-commerce margins benefit from logistics network efficiency and lower unit service costs; and advertising benefits from the expansion of high-margin opportunities including retail media, programmatic advertising, and Prime Video. Although the market will continue to focus in the near term on the scale of the AWS opportunity, capital expenditure cadence, global consumer health, and the impact of new investments on profit linearity, the report considers the current risk/reward attractive within its coverage universe.

Analysis framework

Based on Q2’26 actual results, revisions to Q3’26 and 2026 earnings forecasts, segment growth and margins, management guidance, and valuation models, the report evaluates Amazon.com Inc.’s medium- to long-term growth and margin expansion potential. The valuation uses a sum-of-the-parts approach, applying EV/GAAP EBIT multiples to North America and AWS and an EV/Sales multiple to International.

Methodology notes

• Valuation methodsSum-of-the-parts valuation

  SOTP

  The 12-month price target of $375 is based on a sum-of-the-parts approach: North America is valued at 16x EV/GAAP EBIT, International at 1.25x EV/Sales, and AWS at 29.0x EV/GAAP EBIT, all based on NTM+1 estimates.

• Earnings analysisActuals vs Estimates

  Actuals vs Estimates

  The report compares Q2’26 revenue, AWS, advertising, operating margin, and other metrics with company guidance, GSe, and FactSet Street expectations, and uses the results to adjust subsequent-quarter and full-year forecasts.

• Factor analysisGS Factor Profile

  Growth, Financial Returns, Multiple, Integrated

  The Goldman Sachs Factor Profile compares the stock with the market and industry peers across growth, financial returns, valuation multiples, and integrated metrics.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Amazon.com Inc. (AMZN.US)

  Core covered asset

  Strengths

  High AWS growth, high operating margins, strong AI and chip business momentum, and continued expansion in advertising and retail.

  Weaknesses

  Capital expenditure continues to rise, while the midpoint of Q3 revenue and operating profit guidance is below some expectations.

  Comparison

  Goldman Sachs describes it as one of the most attractive risk/reward opportunities within its coverage universe.

  Risks

  Cloud and e-commerce competition, regulatory changes, macroeconomic volatility, declining risk appetite for growth stocks, and margin pressure from new investments.

• AWS

  Key business segment

  Strengths

  Revenue grew 37% year over year, operating margin was 39%, and both AI and chip businesses reached approximately $25bn in annualized revenue.

  Weaknesses

  The growth trajectory depends on AI demand, the pace of cloud migration, and execution amid high capital expenditure.

  Comparison

  The valuation uses 29.0x EV/GAAP EBIT, highlighting AWS’s central role in the segment valuation.

  Risks

  Cloud competition, rising AI infrastructure costs, and changes in the pace of customer migration.

• Advertising

  High-margin growth business

  Strengths

  Revenue grew 26% year over year, supported by e-commerce traffic, Prime Video, live sports, and programmatic advertising.

  Weaknesses

  Comparable-growth pressure will increase as the revenue base becomes larger.

  Comparison

  Viewed as an important high-margin business supporting Amazon’s margin expansion.

  Risks

  Advertising market cycles, retail media competition, and changes in user engagement.

Key data

• 12-month price target$375.00Raised from the previous target of $335.
• Current price$235.50Price listed on the report cover.
• Implied upside59.2%Based on the target price and current price listed on the report cover.
• Q2’26 consolidated revenue$200.6bnUp 20% year over year and above the upper end of guidance and GSe/FactSet Street expectations.
• AWS revenue growth+37% YoYThe report views AWS growth as important evidence of returns on AI investment.
• AWS operating margin+39%Above the approximately 34% GSe/Street expectation.
• Advertising revenue growth+26% YoYSupported by core e-commerce, Prime Video, live sports, and programmatic advertising.
• 2026 capital expenditure guidance$220bnPreviously $200bn; the increase primarily reflects higher component costs, including memory.
• Revenue backlog$496bnUp 154% year over year and viewed as a factor supporting subsequent AWS growth acceleration.
• 2026 revenue forecast$825.1bnThe previous forecast was $827.60bn.
• 2026 GAAP EBIT forecast$109.4bnThe previous forecast was $106.71bn.
• 2026 GAAP EPS forecast$12.76The previous forecast was $8.85; Q2 other income of $53.4bn contributed to EPS.

Impact & implications

The report’s investment implications for AMZN are positive: stronger evidence of returns on AWS and AI investment helps alleviate concerns about the scale of capital expenditure; improvements in advertising and retail efficiency increase the visibility of margin expansion; and the higher price target reflects Goldman Sachs’ confidence in medium- to long-term operating leverage and risk/reward.

Risks

• E-commerce or cloud growth could be disrupted by competition.
• Expansion of high-margin businesses such as advertising, cloud, third-party seller services, and subscriptions could fall short of expectations.
• Investments in AI, Project Leo, quick commerce, supply expansion, and geographic expansion could pressure gross or operating margins.
• Changes in the global regulatory environment could require product or platform adjustments.
• Global macroeconomic volatility and changes in risk appetite for growth stocks could affect valuation.
• With 2026 capital expenditure rising to $220bn, failure to realize expected returns could trigger market concerns.

What to watch

• Whether AWS revenue growth continues to accelerate and whether demand for AI workloads and enterprise cloud migration remains strong.
• Whether AWS operating margins can remain robust amid incremental AI and core workloads.
• The pace of 2026 capital expenditure execution, component cost inflation, and visibility into investment returns.
• Whether the advertising business can maintain high growth on a higher base.
• Prime consumer health and the effectiveness of expansion in quick commerce, groceries, and everyday essentials.
• Actual performance following Q3’26 revenue and operating profit guidance below expectations.