Wells Fargo has raised its expectations for cloud growth and upgraded Amazon (NASDAQ:AMZN) to Overweight, pointing to accelerating demand from artificial intelligence customers and a surge in new infrastructure projects set to benefit the sector’s biggest players.
A research note led by Ken Gawrelski highlighted a recent series of massive compute deals — including nearly $320 billion tied to OpenAI — as evidence that “the cloud market opportunity [is] much larger than forecast.”
The bank now sees the cloud industry expanding to $873 billion by 2029, up sharply from $230 billion in 2024, reflecting a 31% compound annual growth rate.
Although competitors like Oracle (NASDAQ:ORCL) and newcomers such as CoreWeave (NASDAQ:CRWV) are expected to capture additional share, Wells Fargo’s team stressed that overall market expansion leaves plenty of revenue for existing leaders. They project Oracle’s slice could rise to 15% by 2029 compared with just 4% in 2024.
Amazon’s upgrade is tied to expectations that Amazon Web Services (AWS) will see its market share erosion peak in 2025 before leveling out, helped by initiatives such as Project Rainier — a new Indiana-based data center campus dedicated to Anthropic. The first phase of that project is expected to launch in January 2026 and could ultimately add around $14 billion in annual AWS revenue.
Reflecting this outlook, Wells Fargo raised its 2026 AWS revenue growth estimate to 22% year-over-year, versus a consensus of 18%. The bank also lifted its price target on Amazon to $280 from $245.
Google Cloud (NASDAQ:GOOG) was also singled out for building momentum, supported by rising adoption of its TPU technology and the success of its Gemini AI platform. Wells Fargo nudged up its revenue forecasts for Google Cloud by 3% in 2027 and 6% in 2028, noting that “Gemini’s success, recently topping iOS app store rankings, serves as a strong reference point for TPUs.”
On Microsoft (NASDAQ:MSFT), analysts cited a pipeline of third-party compute agreements exceeding $25 billion as further proof of strong demand and ongoing supply shortages. They boosted Azure’s revenue forecasts by 1% in 2026 and 3% in 2027, highlighting contributions from new capacity partnerships with Nebius and Nscale that will begin coming online in late 2025.
Summing up the outlook, Wells Fargo’s analysts wrote that while competition remains an important factor, “stronger cloud market growth will result in more revenue dollars for all participants.”
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