Amazon reaches a $138 billion AWS milestone agreement, OpenAI bets on Trainium chips

LootboxPhobia · 2026-03-07T05:55:06+00:00

Amazon's stock price rose 3.08% after Morgan Stanley raised its target price to $300, and the expanded partnership with OpenAI further boosted confidence in the growth of cloud services AWS. This new agreement brings OpenAI's commitment to AWS to $138 billion and helps AWS reduce its dependence on Nvidia. Analysts have upgraded their growth forecasts for AWS over the next two years, believing that the partnership effectively reduces risk, while reaffirming their overweight rating on Amazon.

LootboxPhobia

2026-03-07 05:55:06

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Investing.com — Amazon (NASDAQ:AMZN) stock closed up 3.08% this week after Morgan Stanley (NYSE:MS) analysts raised the company’s target price to $300. The upgrade comes after Amazon’s strategic partnership with OpenAI expanded significantly, including a $100 billion commitment to Amazon Web Services (AWS).

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Investors welcomed the strengthened outlook for the company’s highly profitable cloud business.

The expanded agreement adds an extra year to the existing eight-year term, bringing OpenAI’s total commitment to AWS to an astonishing $138 billion. Importantly, this partnership provides a major validation for Amazon’s in-house chips. OpenAI has committed to using about 2GW of Trainium compute power, covering current Trainium3 and the upcoming Trainium4 chips expected in 2027.

The OpenAI contract indicates that AWS is successfully diversifying its AI hardware offerings, reducing reliance on Nvidia, which could lower long-term capital intensity while increasing profitability.

AWS Growth Trajectory and Multi-Model Strategy

Morgan Stanley analyst Brian Nowak and his team expressed increased confidence in AWS’s sustainability, raising their growth forecasts for 2026 and 2027 to 29% and 32%, respectively. The partnership involves more than just infrastructure; it also integrates custom OpenAI models directly into Amazon’s customer-facing applications.

AWS will also be the exclusive third-party cloud provider for OpenAI Frontier, a platform designed for building and managing enterprise AI agents.

Amazon.com Inc. is adopting a multi-model approach, positioning AWS as the “horizontal” layer of the growing AI agent economy. The deal requires the tech giant to invest an additional $50 billion in OpenAI, but the large cloud commitments and “backlog orders” are expected to significantly boost Amazon’s valuation.

Analysts believe this agreement effectively reduces the risk to AWS’s growth narrative over the coming years. As “capacity and profitability calculations” continue to show upside potential, the company reaffirmed its overweight rating and noted that Amazon remains the top choice among large internet stocks.

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