RBC Capital has reaffirmed an Outperform rating and retained a $300.00 price target on Amazon.com (NASDAQ:AMZN) following the company’s most recent financial report. The firm's note underscores a mix of operational strength at Amazon Web Services (AWS) and investor unease around elevated capital spending expectations for 2026.
Operational highlights and growth metrics
RBC described the quarter as "solid," calling out an acceleration at AWS and a modest outperformance relative to benchmarks. The company’s top-line momentum is notable: Amazon posted 12.38% revenue growth over the last twelve months and a five-year revenue compound annual growth rate of 13%, figures highlighted by RBC in its analysis.
On the cloud side, RBC flagged substantial backlog growth at AWS, reporting a year-over-year increase of 38% and a quarter-over-quarter rise of 22%, with backlog figures cited at $244 billion. The research note also pointed to Amazon’s chip business, which RBC says now generates more than $10 billion in revenue and is growing at triple-digit rates.
Capital spending and project risks
Offsetting those positives, RBC expressed concern about Amazon’s 2026 capital expenditure guidance, which it described as higher than expected at $200 billion. The firm suggested that this level of spending could invite competitive scrutiny relative to peers such as Google Cloud, given the potential implications for returns and resource allocation.
The note also raised the prospect of margin pressure from Project Leo, Amazon’s satellite initiative. RBC detailed a launch cadence that includes 20 satellites planned for 2026 and a further 30 in 2027, while noting that commercialization remains on track for 2026. The firm characterized Project Leo as a potential headwind to margins depending on execution and cost dynamics.
RBC’s viewpoint and valuation context
Despite the capex and project-related caveats, RBC sustained a favorable stance on Amazon, calling it "the most underappreciated mega-cap in our space" and expressing "high conviction in AI leadership materializing over time amidst rising ROIC justification." The firm’s overall assessment preserves a positive view of Amazon’s strategic positioning while highlighting where returns will need to justify elevated investment.
Company results and broker reactions
In its latest quarter, the company reported a revenue result that beat consensus estimates by 1%, with the International and AWS segments each outpacing expectations by roughly 2%. RBC noted AWS grew 24% year-over-year in the quarter, and the company’s reported AWS backlog was noted at $240 billion in the corporate release.
Several brokerages subsequently revised price targets or reiterated ratings in light of the quarter and the updated capex outlook. TD Cowen lowered its target to $300, citing capital expenditure concerns. Scotiabank trimmed its target to $275 while maintaining a Sector Outperform rating. Evercore ISI adjusted its target to $285 and described the results as a "Beat & Mixed Quarter" with future capex concerns. UBS set a $301 price target, explicitly referencing the higher-than-expected 2026 capex guidance. Telsey Advisory Group reiterated an Outperform rating and a $300 target, calling out growth opportunities in areas such as grocery and generative AI.
RBC’s note and the subsequent broker reactions together paint a picture of a company balancing strong cloud-driven growth and accelerating chip sales against an elevated capital investment profile and project-level risks that will need to be justified by improving returns on invested capital.