Amazon Needs AWS Growth Acceleration to Offset Rising Capital Spending, RBC Says

11:37 AM EDT, 10/30/2026 (MT Newswires) -- Amazon's (AMZN) Amazon Web Services needs to accelerate growth and outperform expectations to overcome investor concerns about AI returns on investment and rising capital costs, RBC Capital Markets said in a Friday note. The company's expectation for AWS growth of "north of 40%" in 2027 and 2028 was below some buy-side expectations, but was intended to reinforce investor confidence as capital expenditures are expected to increase meaningfully in both years, according to the note. RBC said that while Amazon's AWS backlog accelerated in Q3, the dollars added quarter-on-quarter and year-on-year slowed meaningfully. Amazon's share of sequential and annual cloud revenue additions relative to Alphabet (GOOG), Microsoft (MSFT) and Oracle (ORCL) also fell to three-year lows of 28% and 30%, respectively. The investment firm also noted that AWS margins remain strong, with a 39% operating margin and a 49% incremental margin, and sees potential for further margin leverage despite rising component costs. RBC has an outperform rating and a $330 price target on the company's stock. Shares of Amazon were down 1% in late Friday morning trading. Price: 241.32, Change: -2.47, Percent Change: -1.01