Amazon Web Services Growth Expected to Accelerate to 20%+ in 2026: Morgan Stanley

Amazon Web Services (AWS) growth may accelerate to 20%+ in 2026 as capacity expansion matches rising demand, according to Morgan Stanley. The bank highlights strong demand from companies scaling generative AI workloads and broader adoption of cloud computing. Elevated capital spending is expected to continue through 2026, with AWS catching up to Microsoft's Azure in terms of capex.

Amazon Web Services (AWS) is poised for significant growth in 2026, with Morgan Stanley predicting a potential acceleration to 20% or more. The bank attributes this growth to rising demand from companies scaling generative AI workloads and broader adoption of cloud computing services. Elevated capital spending is expected to continue through 2026, with AWS projected to catch up to Microsoft's Azure in terms of capital expenditure (capex).

According to Morgan Stanley, the increasing demand for cloud services, particularly those related to generative AI, is a key driver for AWS's growth. The bank also highlights the broader adoption of cloud computing across various industries, contributing to the robust demand for AWS services. This growth is expected to be sustained by substantial capital investments, which are projected to continue through 2026.

The strategic collaboration between AWS and West Loop Strategy, an Advanced Tier AWS Partner, is also anticipated to play a significant role in AWS's growth. The partnership aims to accelerate the adoption of Generative A.I., Amazon Q, and Amazon QuickSight, while helping organizations modernize legacy business intelligence (B.I.) platforms. This collaboration is designed to empower organizations to leverage generative B.I. capabilities, migrate dashboards and models from legacy platforms to AWS-native tools, and deliver intelligent, secure A.I. experiences at scale.

The growth of AWS is not limited to generative AI; the bank also expects AWS to catch up to Microsoft's Azure in terms of capex. This suggests that AWS is investing heavily in its infrastructure to meet the growing demand for cloud services and to stay competitive in the market.

In conclusion, AWS is poised for significant growth in 2026, driven by strong demand from companies scaling generative AI workloads and broader adoption of cloud computing services. The bank expects AWS to continue investing heavily in its infrastructure to meet this demand and to catch up to Microsoft's Azure in terms of capex.

References:

[1] https://oilprice.com/Alternative-Energy/Renewable-Energy/US-Power-Sector-Green-Capex-Projected-to-Reach-2-Trillion.html

[2] https://www.businesswire.com/news/home/20250821561601/en/West-Loop-Strategy-Signs-Strategic-Collaboration-Agreement-with-AWS-to-Accelerate-Adoption-of-Generative-A.I.-and-Modernize-Business-Intelligence