The artificial-intelligence trade took a significant hit last week but Wall Street remained bullish on shares of Amazon.com as the e-commerce and cloud computing giant remains poised to be a major AI winner.

Morgan Stanley analyst Brian Nowak raised his price target on Amazon to $350 from $335 and made the stock a "top pick" based on the belief there are multiple reasons why shares can move significantly higher. He maintained his Overweight recommendation on the stock.

Amazon stock rose 2.5% to $256.25 on Monday after ending last week down 4.7% at $250. Nowak's new price target represented 40% upside from the stock's closing price on Friday.

Nowak said in a research note that while the stock market has been reduced to "see-sawing AI leaders and laggards," Amazon stock is still a good bet to move higher.

The analyst expects AWS, Amazon's cloud computing platform, to maintain "outsized" top-line growth through 2028 leading to significant profit. That belief was steadfast even as Nowak forecast that, given incremental chip purchases, Amazon capital spending in 2027 and 2028 will be $355 billion and $365 billion, respectively.

Arguably even more important to Nowak was that Amazon is a "key" AI "enabler and winner" even as Meta Platforms' consumer AI agent Muse threatens traditional e-commerce.

"We expect AMZN to leverage its leading e-commerce infrastructure and loyal user base to continue to monetize," Nowak said. "If Muse's holiday season shopping offerings don't go well without Amazon, that could also be a proof point of the importance of Amazon to scaling agentic commerce."

A major aspect of this thesis is that the breadth and strength of Amazon's business makes it a key driver of generative AI adoption "across the economy," according to Nowak.

While Morgan Stanley was confident Amazon stock will rise sharply from Friday's trading levels, shares have been on a downward trajectory lately.

The stock as of the closing bell on Friday had fallen 12% since closing at $284.02 on Aug. 3, and had dipped below its 50-day moving average around the $257 price level.

With Wall Street dialed in on the AI narrative around compute and capital spending demand versus scrutiny around how these efforts are being funded, Amazon stock may be in for a test this week with the first batch of big tech earnings.

Amazon stock has been a hit with Wall Street. Sixty analysts surveyed by FactSet recommend the stock at Buy and one analyst has it at Hold. The average price target on Amazon is $332.96.