Wells Fargo & Company expects the Rainier project with Amazon.com, Inc. (AMZN.US) to boost cloud revenue.

Wells Fargo & Company has upgraded its rating on Amazon.com, Inc. (AMZN.US) from "hold" to "buy". The bank stated that with the increase in capacity of the Rainier project and the market share loss situation by 2025, they have more confidence in the accelerated revenue growth of Amazon.com, Inc.'s cloud business AWS in 2026. Wells Fargo & Company analyst Ken Gawrelski stated that the Rainier project is a specialized AWS data center for Anthropic computing located in Indiana, expected to be operational in January 2026. Gawrelski's team estimates that the facility, when operating at full capacity (2.2GW), will bring in approximately $14 billion in revenue for AWS annually. Wells Fargo & Company has raised its revenue expectations for AWS in 2026 by 3% and in 2027 by 7%. It is worth noting that Wells Fargo & Company currently predicts a 22% year-on-year growth in AWS revenue for 2026, while the market generally expects an 18% growth. Gawrelski does expect the Rainier project to put pressure on profit margins. In terms of AWS profit margins, Gawrelski expects the Rainier project to have a mild impact of approximately 50 basis points on the profit margin for 2026. However, Gawrelski has raised revenue expectations because the leverage effect of fixed costs will offset this negative impact. Nevertheless, Gawrelski still expects profit margins to face pressure in 2027, but the market generally expects them to remain stable at the 2026 level (34.3%). As of Wednesday's close of the U.S. stock market, Amazon.com, Inc. fell by 0.23% to $220.21, roughly flat from the beginning of the year.