Amazon heads into Q2 earnings with UBS bullish on cloud growth and e-commerce margins

Amazon.com Inc (NASDAQ:AMZN) is set to report its second quarter 2026 results on July 30, with UBS lowering its price target to $305 from $333 while maintaining a ‘Buy’ rating as it expects continued strength from Amazon Web Services and improving e-commerce profitability. The UBS analysts wrote that the price target reduction reflects expectations for higher capital expenditures in 2027 and beyond due to rising component costs and increased demand for infrastructure. The analysts also adjusted near-term AWS revenue expectations after moving OpenAI ’s initial use of Amazon’s Trainium chips from the fourth quarter of 2026 into early 2027, shifting approximately $3 billion in revenue out of this year. Despite the near-term adjustment, UBS highlighted AWS as a key driver of its bullish outlook, noting that it believes the market is underestimating the cloud unit’s backlog and revenue growth potential in the second half of 2026 and into 2027. UBS forecasts AWS revenue growth of 36% in 2026, ahead of the Street estimate of 31%, and expects growth of 48% in 2027 compared with consensus expectations of 30%. The analysts wrote that its largest divergence from consensus remains Amazon’s 2027 operating income outlook, which UBS estimates will be approximately 49% above current Street expectations. UBS’s investment thesis is centered on continued AWS growth acceleration as Amazon expands capacity, alongside potential market share gains in e-commerce driven by improving service levels, including broader same-day delivery and increased investment in groceries. The firm also expects improving unit economics to support faster margin expansion in Amazon’s reta.