Amazon's AWS Just Gave Investors A Big Growth Signal — And Gene Munster Thinks It's Only The Beginning

Munster outlined that Amazon’s AI infrastructure opportunity may be only getting started, pointing to Amazon’s management breaking pattern as far as the guidance for its AWS business is concerned.

• Munster said that the bigger signal came from Amazon's unusually long-term outlook, with management guiding for at least 40% growth in AWS in both 2027 and 2028.
• He also pointed to Amazon’s management expecting the cloud business to eventually reach $1 trillion in annual revenue.
• Munster argued that the length and magnitude of Amazon's AWS outlook are more important than the headline growth number.

Deepwater Asset Management’s Gene Munster believes that Amazon.com Inc. (AMZN) just gave investors a much bigger glimpse into the future of AWS than it typically does.

In a note on Friday, Munster outlined that Amazon’s AI infrastructure opportunity may be only getting started, pointing to Amazon’s management breaking pattern as far as the guidance for its AWS business is concerned.

Amazon shares ended with a decline of over 1% in Friday’s regular trade, but edged up by 0.2% in the afterhours session.

Two Years of AWS Guidance Is the Real Signal, Says Munster

AWS grew 39% year over year in the September quarter, roughly in line with expectations, according to the investor. However, he believes that the bigger signal came from Amazon's unusually long-term outlook, with management guiding for at least 40% growth in AWS in both 2027 and 2028, while adding that the cloud business could eventually reach $1 trillion in annual revenue.

Munster argued that the length and magnitude of Amazon's AWS outlook are more important than the headline growth number. He noted that while Amazon usually provides only one quarter of AWS guidance, the company offering visibility into two full years signals a level of confidence in AI-related demand that the company has rarely communicated this far in advance.

AWS grew 39% in the September quarter, and Munster believes the momentum could continue for years, and potentially, even for the next decade.

He argued that the broader message is that Amazon wants investors to look beyond its traditional retail identity and recognize the scale of the AI opportunity developing inside AWS.

"Despite all of the hype, we are just starting," Munster wrote, arguing that the AI movement could prove to be a "once-in-a-lifetime opportunity."

A $1 Trillion AWS Business Could Change Amazon's Investment Thesis

Munster said that the second major signal was Amazon's expectation that AWS could become a $1 trillion annual business within five to 10 years.

The investor believes that reaching $1 trillion in five years would require AWS to grow at an average annual rate of roughly 42%. Even taking the longer 10-year path would imply an impressive growth trajectory, according to Munster.

He added that this could fundamentally change how investors view Amazon. AWS currently accounts for roughly 21% of Amazon's total revenue, but Munster estimates it could represent about half of the company's revenue within five years.

Amazon also plans to begin selling its custom Trainium AI chips toward the end of 2027. Munster does not expect chip sales to become a major portion of Amazon's revenue, but sees the move as another indication that the company is positioning itself increasingly as an AI infrastructure player.

However, this would require enormous investment from Amazon, according to Munster, who expects the company’s capital spending to rise faster than current Wall Street estimates as it builds the infrastructure needed to support that growth.

What Retail Traders Think Of AMZN Stock

Retail sentiment on Stocktwits around Amazon trended in the ‘extremely bullish’ territory at the time of writing.

AMZN stock is up 4% year-to-date and 8% over the past 12 months. The S&P 500 ETF Trust (SPY) is up 11% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 12%.

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