Amazon July 31

Rating Company Date 31 July 2026 Buy Amazon North America Reuters Bloomberg Rating Buy AMZN.OQ AMZN US Price target (USD) 325.00 United States Price at 30 Jul -week range 274.99 – 28.77 TMT Internet Valuation & Risks

Demonstrating the Returns Benjamin Black, CFA AMZN delivered a strong 2Q26 result, with AWS serving as the primary driver of Research Analyst upside. AWS revenue accelerated to 37% y/y growth, up from 28% in 1Q26, ahead of our estimate, consensus and buyside expectations, while AWS operating Kunal Madhukar, CFA income exceeded expectations even excluding a ~$600mn energy-contract Research Analyst benefit. Management attributed the strength to a combination of AI demand, enterprise cloud migrations and broader infrastructure consumption, with Raymond Wong backlog expanding to $496bn (up from $364bn in the prior quarter) and AI Research Associate revenue surpassing a $25bn annualized run rate (+66% q/q). 3Q guidance was largely in line with our preview framework. Revenue guidance incorporates an approximately 400bps headwind from Prime Day shifting into 2Q26 versus 3Q25, Benjamin Hui, Esq. Research Associate consistent with our expectation. Importantly, operating income guidance was above expectations at the high end, suggesting the underlying earnings trajectory remains intact despite continued investment.

Beyond AWS, management highlighted accelerating Advertising growth (+26% Key changes y/y) that benefitted from Prime Day, continued improvements in retail unit Price target (USD) 315 325 3% growth and delivery speed, and stronger AI adoption across the platform. While Source: Deutsche Bank FY26 capex guidance increased to $220bn from $200bn, management stressed that the increase reflects higher memory costs rather than incremental capacity expansion. Overall, the quarter reinforced AMZN's position as a leading beneficiary of AI infrastructure spending, with demand, backlog and profitability all trending ahead of expectations.

In sum, we think AMZN likely is one of the handful of companies within the AI- space, that have natural advantages arising from a diverse mix of businesses which stand to benefit from the explosive growth in AI capabilities. Therefore, while the planned capex deployment in the near-term is modestly higher, we are bullish because 1) the asset that is being created would generate returns over the next 5-6 (chips + networking) to 30 (the data center shells) years, 2) the core businesses are already seeing improving revenue growth, 3) allowing Amazon to expand into new TAMs, and 4) its being funded mostly from cash generated by internal operations, which mitigates risk along with debt. Moreover, AWS margins are expanding faster than we anticipated driven by durable tailwinds: supportive Bedrock revenue growth, ramped fixed cost leverage, growing efficiency gains, and improving chip mix. In fact, AMZN's chip business is scaling (both Trainium and Graviton) with the "stand-alone" run rate over $25bn, up 25% q/q. Moreover, it appears AI workloads are serving to stimulate higher demand for core workloads, creating a much more balanced growth profile.

Deutsche Bank Securities Inc. IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

All in all, we maintain our Buy rating and are raising our price target to $325 from $315. Our TP is derived by a blended approach that uses both a SOTP model and a 30x GAAP EPS multiple on 2027 estimates. For our SOTP model, we comp the Amazon Retail business to large retailers and AWS business against large software and cloud providers. We believe AWS is a clear winner in the generative AI computing paradigm shift and the multiple should reflect this.

2Q26 results AMZN revenue came in ahead of our estimate / Street, driven by strong AWS revenue growth and North America. AWS revenue increased 37% y/y to $42.2bn, versus our estimate…