Jefferies Sees Amazon (AMZN) Well-Positioned for AI Inference and Production Workloads

Amazon Inc. (NASDAQ:AMZN) is among the best software infrastructure stocks to buy according to hedge funds. On January 5, Jefferies hiked the stock price target from $275 to $300 and reiterated its Buy rating. The firm acknowledged that Amazon’s shares have underperformed in 2025, partly due to negative investor sentiment stemming from a perceived lag in AI development relative to peers such as Microsoft and Google.

However, the firm believes Amazon is in a very strong position, with a large-scale cloud computing presence through its Amazon Web Services (AWS), and is well positioned to capitalize on opportunities as focus shifts from AI model training toward inference and production workloads.

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Jefferies highlighted that AWS revenue growth improved from 17% in the first half of 2025 to 20% in the third quarter, and sees scope for further acceleration into the mid-20% range in 2026. Margins are expected to remain resilient in the mid-30s, supporting continued profitability at the cloud segment level.

At the consolidated level, the firm models a modest slowdown in overall revenue growth to around 10% in 2026 from roughly 12% in 2025, alongside further operating leverage, with operating margins expected to expand to approximately 12.3% in 2026 from 11.2% in 2025.

Overall, at approximately 12x 2026 EV/EBITDA, Jefferies believes the valuation is attractive considering its expectations for strong growth and profitability.

That said, Amazon is a consensus Buy, with almost all 74 analysts covering it assigning a Buy or equivalent rating. The stock has already gained over 7% by the end of the first full week of 2026, and analyst consensus still expects it to rally another 21%, which would bring Amazon’s market cap above $3 trillion.

Amazon.com Inc. (NASDAQ:AMZN) operates across e-commerce, digital content, advertising, and cloud computing. Its online and offline stores offer both in-house and third-party products, while its Amazon Web Services (AWS) division runs one of the world’s largest data center networks.

While we acknowledge the risk and potential of AMZN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.