Wells Fargo boosted its rating on Amazon (NASDAQ:AMZN) to Overweight from Equal Weight on Wednesday. The firm said it has greater conviction in AWS revenue acceleration in 2026, supported by Project Rainier capacity additions and peak share losses in 2025.
Analyst Ken Gawrelski noted that Project Rainier is a dedicated AWS data center for Anthropic compute in Indiana, which is expected to start coming online in January 2026. Gawrelski and his team estimated that the facility supports ~$14B annual AWS revenue at full capacity of 2.2GW. Wells Fargo hiked its 2026 AWS revenue estimate by 3% and 2027 AWS revenue by 7%. Notably, the Wells forecast for 2026 AWS revenue growth is now +22% year-over-year vs. consensus +18%.
Gawrelski does expect Project Rainier to cut into profits.
“On AWS margins, we expect Project Rainier will be a modest ~50bps headwind to 2026 margins as the project ramps and given the large upfront technical infrastructure investments. This is offset by fixed-cost leverage given our upward revisions to total revenue forecasts. That said, we still expect to see y/y margin pressure into 2027 vs consensus expectations for margins to stabilize at 2026 levels (34.3%).”
Shares of Amazon (NASDAQ:AMZN) were up 1.2% premarket to $223.25. The e-commerce stock has posted a modest 2% year-to-date date.