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Why Wall Street Stayed Bullish on Amazon After Its Q3 2026 Earnings Miss
Amazon missed overall earnings and revenue expectations, but AWS still grew 39.3% to $46 billion. The split is about time horizons: investors reacted to near term results and spending, while bullish analysts focused on whether AWS demand can support future growth.
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Key takeaways
- Amazon missed overall earnings and revenue expectations, but AWS still grew 39.3% to $46 billion.
- The split is about time horizons: investors reacted to near term results and spending, while bullish analysts focused on whether AWS demand can support future growth.
- Morgan Stanley kept its Overweight rating but cut its price target to $335 from $350; UBS raised its target to $352 from $348.
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openai.comCreate a landscape editorial hero image for this Studio Global article: Why did Morgan Stanley and other Wall Street firms remain bullish on Amazon after its mixed third-quarter 2026 results and stock decline, an. Article summary: Wall Street’s bullish view rested on a distinction between a disappointing quarter relative to elevated expectations and an intact multiyear AWS growth opportunity: analysts saw the former as a valuation reset, not neces. Topic tags: general, general web, user generated. Style: premium digital editorial illustration, source-backed research mood, clean composition, high detail, modern web publication hero. Use reference image context only for broad subject, composition, and topical grounding; do not copy the exact image. Avoid: logos, brand marks, copyrighted characters, real person likenesses, fake screenshots, UI text, readable text, watermarks, charts with fa
Amazon’s third-quarter 2026 results presented two different stories: the company missed earnings and revenue expectations, while AWS continued to grow rapidly. That contrast helps explain why Amazon’s shares fell as some analysts remained positive: investors were weighing immediate results and the cost of AI infrastructure, while bullish analysts focused on AWS’s longer-term growth opportunity. 4
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A strong AWS quarter still fell short of some expectations
AWS revenue rose 39.3% year over year to about $46 billion, accelerating for a sixth consecutive quarter. The business had a $184 billion annualized revenue run rate, added $3.8 billion in revenue sequentially and reported a $578 billion backlog. 1
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Those figures support the case that customer demand remained strong. But strong growth does not guarantee that results will top every benchmark investors are watching. Amazon’s overall earnings were $1.89 per share, versus $1.96 expected, and revenue was $201.94 billion, below the $202.31 billion consensus estimate reported by Invezz. 18 AWS revenue, meanwhile, was described as roughly in line with expectations by CNBC.
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Investor expectations may also have been higher than published consensus estimates: Bank of America reportedly said expectations for AWS growth had reached as high as 42%. That helps explain why 39.3% growth could look impressive on its own and still disappoint investors hoping for a faster rate. 33
Why some analysts kept a positive view
The bullish case was not that the quarter had no weaknesses. It was that strong AWS growth, a large backlog and management’s forward outlook could support continued expansion beyond one quarter.
- AWS’s growth trajectory remained a key part of the thesis. Amazon said AWS growth had accelerated for six consecutive quarters, and earnings-call coverage reported expectations for growth above 40% in both 2027 and 2028.
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- The backlog offered visibility, but not guaranteed revenue. AWS reported a $578 billion backlog, representing contracted future business; it should not be treated as revenue already earned or as a guarantee that all the work will be delivered on a particular schedule.
- Some analysts saw additional sources of potential upside. Before the earnings report, Morgan Stanley’s Brian Nowak named Amazon a top pick and raised his price target to $350 from $335. His outlook included a 47% AWS growth forecast for 2027, as well as potential contributions from AI-related opportunities and robotics-enabled fulfillment. These were analyst expectations, not guaranteed outcomes.
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Analyst ratings show optimism—with adjustments
After the results, Morgan Stanley maintained its Overweight rating but cut its target to $335 from $350. The revised target was reported to imply about 37% upside from the share price used in that analysis. The target cut reflected a more cautious valuation, even as the rating remained positive. 18
Other firms also adjusted their targets in different directions:
- Bank of America kept its Buy rating and reduced its target to $317 from $320.
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- UBS raised its target to $352 from $348, citing AWS’s growth outlook, the backlog and the possibility of a much larger AWS business over time.
- Goldman Sachs maintained a Conviction-Buy rating with a $370 target, according to analyst-tracking data.
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These calls are not proof that Amazon’s stock will rise. Price targets reflect analysts’ assumptions and can change as results, spending and market conditions evolve.
The risk: growth has to justify the spending
Amazon expected about $220 billion in 2026 capital spending, with management indicating that spending could rise further in 2027. 1
6 At the same time, its trailing 12-month free cash flow was reported at negative $42.4 billion.
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That tension is central to the debate. The bullish view is that investment in cloud and AI capacity helps Amazon serve strong demand and convert its backlog into future business. The cautious view is that the company is committing substantial cash before investors can see the returns. A large backlog and fast revenue growth do not, by themselves, establish how quickly new capacity will produce profitable cash flow.
The key question is therefore not simply whether AWS can keep growing quickly. It is whether that growth can generate returns that justify the investment required to support it. For Wall Street’s bullish analysts, the longer-term AWS opportunity remained intact; for investors reacting to the quarter, the spending and cash-flow risks were difficult to ignore. 1
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What is the short answer to "Why Wall Street Stayed Bullish on Amazon After Its Q3 2026 Earnings Miss"?
Amazon missed overall earnings and revenue expectations, but AWS still grew 39.3% to $46 billion.
What are the key points to validate first?
Amazon missed overall earnings and revenue expectations, but AWS still grew 39.3% to $46 billion. The split is about time horizons: investors reacted to near term results and spending, while bullish analysts focused on whether AWS demand can support future growth.
What should I do next in practice?
Morgan Stanley kept its Overweight rating but cut its price target to $335 from $350; UBS raised its target to $352 from $348.