After a strong start to 2024, Amazon.com stock fell into a late summer slump. But shares of the e-commerce giant have climbed back to near record highs achieved in early July.
Amazon's third quarter wraps up next week, with its earnings results expected later in October. That could prove the next catalyst for Amazon stock. Shares of the company have returned to a market cap above $2 trillion but Amazon is yet to sustain a run beyond highs reached in 2021, unlike big tech peers such as Microsoft, Apple and Meta. Profit improvements and excitement about AI powered Amazon stock to 81% gains last year, after shares lost nearly half their value in 2022.
The 30-year-old Amazon is still among the world's most valuable companies. But the Seattle-based firm is grappling with concerns about the economy, along with stepped-up competition for digital sales from brick-and-mortar titan Walmart, plus discount-focused upstarts like Temu and Shein.
Meanwhile, its Amazon Web Services, or AWS, cloud business is battling Microsoft to be the leading cloud platform for generative artificial intelligence. The so-called "Everything Store" operator also is staring down a major antitrust battle with the U.S. government.
So, is Amazon stock a buy? Here's what investors need to know.
Amazon Stock Nears Buy Point
Amazon stock lost a half percent to close at 191.16 on Thursday. Shares are 5% below a 201.20 consolidation pattern buy point, according to MarketSurge.
Earlier this month, Amazon stock decisively regained its 50-day moving average, a closely-watched metric for stock charts. The gains have pushed Amazon's Relative Strength Rating to a solid 80. The RS Rating started the month near 60 out of a best-possible 99, whereas IBD recommends focusing on stocks with at least an 80 RS Rating.
Shares have bounced back after falling nearly 9% on Aug. 2 after Amazon published mixed second-quarter results. Concerns about the broader economy pushed Amazon shares even lower in the next trading session.
Shares hit a six-month low of 151.61 in intraday trading Aug. 5, breaking below Amazon's 21-day, 5o-day and 200-day moving averages. But Amazon stock has inched up with stops and starts from a low point in early August. The stock is up 7% in September.
Amazon Stock: Analysts Remain Bullish With Holiday Season Looming
Despite the recent revenue miss in the second quarter, Wall Street analysts are mostly positive on Amazon stock.
Of the 65 Amazon stock analysts following the company, 95% have a buy rating, according to FactSet.
The average target price for Amazon stock by analysts is 220.58, according to FactSet, implying roughly 15% upside from Amazon's closing price Thursday.
There are some points of debate among analysts, however. Some are concerned that consumers trading down on price will cut into the growth of Amazon's retail margins. Others, however, see Amazon as primed to benefit from reset expectations following the Q2 report.
Amazon will host its two-day Prime Big Deal Days discount event starting Oct. 9. It could be seen as an early start to holiday shopping season. Analysts with Adobe project e-commerce spending will reach $240.8 billion from Nov. 1 through Dec. 31, an 8.4% increase from the total spending in the same period 2023. That marks a major acceleration from last year's 4.9% growth.
A separate consumer survey from BofA Securities, meanwhile, found that 52% of U.S. shoppers plan to increase online spending for the holidays. Amazon-related spending intentions were highest, according to a Sept. 25 client note, with Walmart second.
"Our survey suggests healthy online spending intentions for the holidays, a focus on value pricing, a shift in spending intentions to consumable categories from discretionary, and biggest expected share gains (per intent to use more) for Amazon and Walmart," BofA Securities analyst Justin Post wrote in the note.
Post rates Amazon a buy with a price target of 210.
Amazon Stock Slides After Q2 Revenue Miss
Amazon suffered its worst trading day of 2024 following its second-quarter earnings report. Shares fell 8.8% after Amazon reported lower-than-expected sales for the second quarter in an earnings statement published Aug. 1.
The tech giant earned an adjusted $1.26 per share on sales of $148 billion for the June-ended quarter. On average, analysts projected adjusted earnings of $1.03 per share on sales of $148.67 billion, according to FactSet.
On the positive side, AWS sales exceeded expectations with revenue of $26.3 billion, up 18.7% year over year. Analysts were expecting sales growth of 17.6% for AWS prior to the report. Chief Executive Andy Jassy said in a news release that AWS sales are reaccelerating and it remains the top choice for enterprises launching AI-related projects, or moving parts of their operations to the internet cloud.
Investors have spent the past year laser-focused on the revenue growth for AWS. Since the cloud division drives the majority of Amazon's profits, investors fretted as the AWS's rapid growth rate began slowing in 2022. But cloud revenue has now accelerated in back-to-back quarters for Amazon.
But investor's concern is shifting now to the sprawling retail operations. Year-over-year sales growth slowed for Amazon's North America division, from 12% in Q1 to 9% in Q2. The North America division totaled $90 billion in revenue for the quarter, which includes all retail sales, advertising and subscription services revenue in the region.
Amazon also gave lower-than-expected guidance for sales and operating income for the current quarter.
Jassy told analysts that "customers continue to trade down on price when they can." He added that larger purchases, like computers and televisions, are growing "more slowly than we see in a more robust economy."
Amazon Stock: Technical Analysis
Amazon stock's technical ratings tumbled during its July slump but have recovered.
The IBD Stock Checkup tool shows Amazon stock holds an IBD Composite Rating of 92 out of a best-possible 99. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Amazon's Relative Strength Rating of 80 out of a best-possible 99, indicating the stock has outperformed 80% of stocks in IBD's database over the past 12 months.
Further, Amazon stock holds an Accumulation/Distribution Rating of B. That rating analyzes price and volume changes in institutional ownership for a stock over the past 13 weeks. The current rating indicates more buying than selling by institutions.
While it approaching a pivot point from its consolidation pattern, Amazon stock is not currently in a buy zone, according to MarketSurge. Investors also will want to check out IBD's Big Picture column for the current market direction before considering any buy points.
Here is a guide to understanding IBD's rating system.
Will Regulators Take A Bite Out Of Amazon Stock?
One other factor to watch for Amazon: Regulation. Amazon is staring down what is likely the biggest legal fight in its 30-year history. Regulators are challenging Amazon's market power and the company likely will grapple with intense scrutiny in the coming years.
Amazon's regulatory problems came into sharp focus on Sept. 26 when the Federal Trade Commission and 17 state attorneys general filed a major antitrust lawsuit against Amazon.
The FTC accuses the company of using its market power to inflate prices and overcharge merchants. Amazon rejects the allegations, arguing that the FTC is "wrong on the facts and the law, and we look forward to making that case in court," the company said in a statement.
In an Oct. 3 client note, JPMorgan analyst Doug Anmuth said the lawsuit "was very much as expected, and we believe it will be challenging to prove that AMZN illegally maintains monopoly power."
The lawsuit set up a long battle. In February, a federal judge set an October 2026 trial date for the case.
Amazon Market Cap
You can check for Amazon's current stock price here. Amazon's market cap was $2 trillion, as of market close Sept. 26. Here is how the stock has grown over time:
| Time Period | AMZN Stock % Gain | S&P 500 % Gain |
|---|---|---|
| 2024* | 25.8 | 20.5 |
| 2023 | 81 | 24.2 |
| 2022 | -49.6 | -19 |
| 2021 | 2.4 | 27 |
| Since 1997 Amazon IPO* | 205,116 | 574 |
