MW Amazon's stock comeback hinges on AWS hitting this magic number. Why analysts are cautious.

By Christine Ji

Amazon's AWS business likely needs to achieve 20% growth to excite Wall Street, but analysts see increased competition as a key hurdle

Amazon's stock has fallen 1% so far in 2025.

To many on Wall Street, Amazon.com Inc.'s future stock performance depends increasingly on one segment of its business: Amazon Web Services.

Amazon (AMZN) will need to show investors that it can accelerate AWS growth after last quarter's ho-hum 17.5% growth rate, which led some to wonder if AWS was failing to gain incremental artificial-intelligence workloads.

The magic growth figure that investors want to see is 20%, Jordan Klein, desk-based analyst at Mizuho, told MarketWatch recently. Achieving this benchmark would help Amazon shed its reputation as an AI laggard and provide a meaningful catalyst for shares of the company, which have fallen 1% since the start of 2025, even as other members of the group of megacap tech stocks known as the Magnificent Seven have rallied.

Read on: Why Amazon's lagging stock now may offer the perfect buying opportunity

Clearing the hurdle won't be easy. Raymond James analyst Josh Beck wrote in a Wednesday note that while "modest acceleration to 18.5% in 2026 is reasonable, we fail to collect enough evidence to support an acceleration to >20% underlying the bull case." Beck sees AWS hitting 18.9% growth by 2027.

In his opinion, a few things are standing in the way of an AWS acceleration to 20%. Raymond James's checks in the cloud sector showed that customers are increasingly using multiple cloud providers, including Alphabet Inc.'s $(GOOGL)$( GOOG) Google Cloud. The checks also showed mixed feedback for Amazon's Q and Kiro products, which help developers troubleshoot issues and generate code.

Additionally, Beck highlighted slow momentum for key AI products, such as Amazon's Nova large language model and Bedrock Agent framework.

Citi analyst Ronald Josey took a slightly more optimistic view in a Monday note, writing that AWS could achieve 18% growth by the third quarter of 2025 and 19% by the end of the year. He did note that the path to 20% growth is still unclear and that AWS's near-term outlook will depend on variables such as how fast capacity from Amazon's Project Rainier data centers can come online, the company's strategy for its custom Trainium and Inferentia chips, and chip pricing.

While Amazon is pushing its custom chips, a significant portion of AWS's AI workload revenue comes from customers training models on Nvidia Corp.'s (NVDA) Hopper and Blackwell chips, according to the Raymond James analysis. In order for AWS to achieve 20% growth, Amazon will need to scale adoption of its custom chips and continue to provide customers with access to Blackwell chips, Beck predicts.

However, Beck expects Project Rainier to provide a boost to Amazon's AI workloads, and he highlighted that the Trainium3 chip, expected to be released later this year, could have four times the performance of the current model.

Both he and Josey have bullish ratings on Amazon's stock, even though they see roadblocks in the way of a 20% AWS growth target.

Read: Amazon's 'crown jewel' is this business that doesn't get nearly enough attention

-Christine Ji

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October 15, 2025 10:12 ET (14:12 GMT)

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