Amazon Surges 5% as Morgan Stanley Raises Target to $350 and AWS, Nuclear and Chip Moves Add Fuel

Amazon shares jumped roughly 5% on Monday, their best single-session gain since the July earnings report, adding approximately $135 billion in market capitalization after Morgan Stanley named the stock a top pick and raised its price target to $350 from $335, implying about 40% upside from current levels. The bank cited five catalysts: accelerating AWS growth, agentic AI initiatives, physical AI expansion, retail execution, and what it called an under-appreciated runway for cloud revenue. Morgan Stanley projects AWS revenue growth of 47% in 2027, a figure it argues the market has yet to fully price in.

On the chip front, Amazon announced that its AWS Trainium AI processors will support PyTorch, the widely used open-source coding language most AI developers rely on. The company said it will open-source TorchNeuron at the PyTorch conference on October 20, giving all PyTorch developers direct access to its custom silicon. The move is a direct challenge to Nvidia's CUDA ecosystem, which has long been the dominant programming environment for AI workloads and a key competitive moat for Nvidia's chip franchise.

Amazon, American Electric Power, and nuclear reactor developer X-energy signed a joint development agreement to evaluate a 960-megawatt advanced nuclear project in Sullivan County, Indiana, on the site of a former coal plant. The plan calls for 12 small modular reactors, with Amazon intending to purchase the electricity generated. X-energy shares rose sharply on the news after a period of post-IPO weakness.

On the logistics side, analysts highlighted Project Mercury, Amazon's plan to expand Sub Same-Day fulfillment centers from 85 locations to more than 1,000 by 2031. The estimated capex of $6.8 billion over three years represents just 1.3% of Amazon's trailing twelve-month capital expenditure, a ratio that analysts said could produce material competitive gains against Walmart and drive upside earnings surprises in coming years.

The broader spending picture remains striking: Amazon is on track for $220 billion in capital expenditures this year, largely directed at AI data center buildout. AWS infrastructure vice president Prasad Kalyanaraman acknowledged internally that the AI business is currently free cash flow negative and said he expects overall free cash flow to remain negative for the next couple of years. Separately, 3M disclosed an expanded commercial agreement with an Amazon subsidiary, issuing a warrant for 3,162,015 shares at $164.89 per share, with 85% of the warrant shares vesting once cumulative payments to 3M reach $6 billion.