Shares of Amazon (AMZN +9.77%) are up about 11% following a strong third-quarter earnings report on Oct. 30. The company's revenue looks solid, up 13% year over year to $180 billion.
Investors that missed the chance to buy Amazon at its recent low of $211 might be wondering if they should buy the shares around the recent high of about $247. It's all about growth and valuation. Amazon could see accelerating growth in its cloud computing business over the next year, while the stock is still trading at an attractive multiple to its trailing operating cash flow.
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The stock could hit $350 in 2026
Amazon Web Services (AWS) remains the top cloud provider for enterprise. It is also Amazon's most profitable business, contributing about two-thirds of the company's operating profit. AWS is now generating $132 billion in revenue on an annual basis. This is after AWS reported third-quarter revenue grew 20% year over year.
AWS growth has been held back in recent quarters over limited compute capacity. But Amazon recently added 3.8 gigawatts worth of power capacity to support more compute in its data centers. This is unleashing higher revenue growth.
NASDAQ: AMZN
Key Data Points
Additional compute capacity should lead to stronger growth in AWS in 2026. Even with the stock trading close to new highs, it trades at just 22 times its cash from operations (CFO) per share. This is toward the lower end of its 10-year trading range of 15.8 to 47.5 times trailing-12-month CFO.
If the stock returns to its historical average multiple of 30 and the company sees just a marginal increase in CFO, the shares could climb to around $35 within the next 12 months.
