Investing.com -- Amazon.com Inc shares rose more than 5% on Monday after Morgan Stanley upgraded the stock to a top pick and increased its price target to $350 from $335 while keeping an Overweight rating.

Morgan Stanley analyst Brian Nowak said the market underestimates the growth potential of Amazon Web Services. He projected AWS revenue will grow 47% year-over-year in 2027. Nowak also identified AI-powered shopping features and robotics fulfillment centers as additional growth opportunities.

"We continue to think AWS's growth and profit runway is under-appreciated," Nowak wrote in a note to clients.

Amazon announced two separate developments on Monday. At a developer conference in Silicon Valley, the company introduced TorchNeuron, a free open-source software tool. The tool enables Amazon's Trainium AI chips to run PyTorch code with a single configuration change, competing with Nvidia's Cuda software platform.

Amazon also entered a joint development agreement with American Electric Power and X-energy to evaluate a 960-megawatt small modular reactor project in Indiana. The project aims to provide carbon-free energy for Amazon's AI infrastructure.