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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.

READ NEXT: 7 Spin-Off Companies in 2025 and 11 Best Stocks You’ll Wish You Bought Sooner.

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

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

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