Amazon (AMZN) stock is up nearly 13% year to date, recently surpassing the $260 level to reach new all-time highs. A pivotal catalyst behind this rally is the sweeping restructuring of the Microsoft (MSFT)-OpenAI partnership announced on April 27, which dismantles Microsoft’s longstanding exclusive access to OpenAI’s models and clears the way for Amazon Web Services to distribute OpenAI’s frontier AI products directly through its Bedrock platform. Amazon CEO Andy Jassy moved swiftly, confirming that OpenAI’s models will be available to AWS customers within weeks, alongside a new Stateful Runtime Environment designed for long-running AI agent workloads.
www.barchart.comThe revised agreement converts Microsoft’s intellectual property license from exclusive to non-exclusive through 2032, enabling OpenAI to serve all its products across any cloud provider.
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This change retroactively validates the $50 billion Amazon investment in OpenAI announced in February, which had created significant legal tension with Microsoft and reportedly triggered consideration of litigation. UBS characterized the outcome as a major win for Amazon and difficult to frame as anything other than a negative for Microsoft, whose shares fell on the announcement.
AWS now stands to capture a substantial share of enterprise AI inference workloads that were previously restricted to Microsoft Azure. The demand for OpenAI models on AWS has been described internally as staggering, with OpenAI acknowledging that the Microsoft partnership had constrained the company’s ability to reach enterprises already embedded in the AWS ecosystem.
With AWS commanding 28% of the global cloud infrastructure market compared to Azure’s 21%, the addition of OpenAI’s models to Bedrock significantly expands AWS’s total addressable market in AI services.
Amazon’s AI positioning extends well beyond the OpenAI deal. AWS revenue accelerated to 24% year-over-year growth in the fourth quarter of 2025, reaching a $142 billion annualized run rate, representing the segment’s fastest growth in 13 quarters. The company’s custom silicon strategy is gaining powerful validation, with Meta (META) signing a multibillion-dollar agreement to deploy tens of millions of Graviton5 processors for real-time AI reasoning tasks. Anthropic has committed $100 billion over 10 years leveraging more than 1 million AWS Trainium chips, further cementing AWS’s hardware moat.
Mizuho raised its Amazon price target to $325, citing AWS’s emergence as the cloud backbone for AI infrastructure, while UBS analyst Stephen Ju expects 38% AWS growth in 2026, far exceeding the Street consensus of 26%. A total of 55 out of 58 analysts covering the stock maintain “Buy” recommendations as tracked by Barchart, with a consensus price target of approximately $290.
www.barchart.comThe earnings report on Wednesday, April 29 will be closely scrutinized for updates on AWS momentum, remaining performance obligations, and AI revenue trajectory. Jassy disclosed in his April shareholder letter that AWS AI services achieved a $15 billion annual revenue run rate in the first quarter of 2026, growing at roughly 260 times the pace of AWS at a comparable stage after launch. Amazon’s $200 billion capital expenditure commitment for 2026, while a source of concern for some investors, is increasingly viewed as tied to contracted customer demand rather than speculative buildout.
www.barchart.comHowever, the broader market context today introduces headwinds that temper the stock’s near-term outlook. A Wall Street Journal report revealed that OpenAI recently missed its own internal targets for new users and revenue, with CFO Sarah Friar reportedly warning that the company may struggle to meet future computing contract obligations. This report sent AI infrastructure stocks sharply lower, with the Nasdaq Composite Index ($NASX) falling 1.2% and names like Oracle (ORCL), ARM Holdings (ARM), and Advanced Micro Devices (AMD) declining between 3% and 8%. Surging crude oil prices, with WTI (CLM26) approaching $100 and Brent (CBM26) exceeding $111 amid the continued closure of the Strait of Hormuz, are adding inflationary pressure and weighing on growth stock valuations broadly.
Amazon’s valuation reflects a premium over its four-year historical average of 29 times, but this re-rating appears justified by the structural transformation of AWS into a dominant, high-margin AI infrastructure platform. Operating margins expanded from 2.4% in 2022 to 11.2% in 2025, and the advertising segment generated $21.3 billion in a single quarter, providing internal cash generation that comfortably funds AI investment. The combination of multi-cloud OpenAI distribution, custom silicon momentum, accelerating AWS growth, and diversified revenue streams positions Amazon as arguably the most complete AI infrastructure play among the hyperscalers heading into a pivotal earnings week.
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On the date of publication, Sarah Holzmann did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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