AMZN Stock Price Today: What the Anthropic Deal Says About Amazon’s Next Five Years

Amazon announced late on Monday, after the New York markets had closed, that it would invest an additional $25 billion in Anthropic, the AI startup it has supported since 2023, as part of a new deal wherein Anthropic agreed to spend over $100 billion on Amazon Web Services over the following ten years. In premarket trading on Tuesday morning, AMZN shares had increased by over 2.8%, momentarily approaching $255. Given the magnitude of the announcement, the response was largely restrained, indicating that investors are still debating whether this is a game-changing agreement or an expensive commitment that will take years to justify.

In any case, the headline number is substantial enough to command attention. Anthropic is currently one of the biggest bets any tech company has made on a single AI partner, with Amazon having invested about $33 billion in total. In exchange, Anthropic consented to use Amazon’s proprietary Trainium chips, secure up to 5 gigawatts of capacity, and develop Claude and future AI models on AWS infrastructure. In the announcement, Anthropic CEO Dario Amodei explained that the arrangement was required to keep up with what he called “unprecedented growth”—a base of 300,000 customers whose demand was taxing the company’s infrastructure. The key question that will determine whether Amazon’s investment appears overpriced or prophetic in retrospect is whether that demand trajectory continues.

The AWS story is the most important thread for anyone attempting to predict the direction of AMZN stock. On Monday, KeyBanc analyst Justin Patterson increased his price target from $285 to $325 while maintaining his Overweight rating and describing the cloud division’s 30% growth trajectory as “the story of the quarter.” According to his calculations, earnings per share will be close to $10 by 2027, and his $325 target represents a 33x multiple on that estimate. Before the Anthropic news broke, Bank of America analysts had already calculated that the AI partnership was boosting AWS revenue by about $1.3 billion in just the first quarter. This relationship is greatly expanded by the additional investment, which links Anthropic’s computational expenditures to Amazon’s cloud revenue in ways that should be evident in future profits.

Aside from AWS, Amazon is working on a number of other projects concurrently. Despite consumer spending showing signs of caution elsewhere, the grocery segment has continued to perform better than the skeptics anticipated. The company’s satellite broadband project, Amazon Leo, is getting ready for launch, and the impending purchase of Globalstar spectrum adds infrastructure that could significantly increase its connectivity footprint. These are big wagers. These are capital-intensive, concurrent programs that operate alongside the main cloud and e-commerce businesses, necessitating a level of operational management that not all businesses of this size are adept at.

It is important to recognize the short-term obstacles. Due to the ongoing tensions with Iran, the Strait of Hormuz situation has increased shipping costs and created bottlenecks for Amazon’s logistics network. Although it’s a delicate change that shifts costs to the sellers who rely on the platform, Patterson sees the company’s recent implementation of a 3.5% fuel surcharge on third-party marketplace sellers as a partial protection for margins. As a result, KeyBanc is cautious about first-half profitability and anticipates that these pressures will be evident in the Q2 outlook when Amazon releases Q1 results on April 29.

Observing all of this from a distance gives the impression that Amazon is simultaneously operating in multiple markets, including cloud, AI infrastructure, logistics, satellite communications, and grocery, and succeeding in the majority of them while maintaining a high price-to-earnings ratio. It is not impossible to maintain that combination. However, it demands that everything continue to move simultaneously in the same direction, which is a lot to ask of any business, even one that has spent thirty years disproving people’s perceptions of its capabilities.