Amazon has benefited from the rally among artificial intelligence stocks. The company has been on a tear adopting AI tools and features for its twin businesses: retail and cloud. But after its impressive rally, investors wonder if there is room left for more for Amazon stock growth, and which segment is likely to lead the rally.
Amazon stock surged Friday after the company reported a beat on fourth-quarter earnings. The stock rebounded strongly from its 10-week moving average, a line of support since early January. Amazon now heads toward a split-adjusted record high of 188.65, reached in July 2021.
With its earnings report, Amazon said sales rose 14% from the prior-year quarter to $170 billion, above views of $165.9 billion. Earnings of $1 a share also topped estimates of 80 cents. During the fourth quarter, revenue from the company's Amazon Web Services cloud business, or AWS, increased 13% to $24.2 billion, meeting analyst forecasts.
For the first quarter that ends in March, the e-commerce behemoth expects sales between $138 billion and $143.5 billion. Analysts are calling for $142 billion.
Amazon stock holds a Relative Strength Rating of 93 out of a best-possible 99 from Investor's Business Daily while its Composite Rating stands at 96. Its EPS Rating of 82 is considered an adequate show of strength.
With an Accumulation/Distribution Rating of B+, the stock has clearly been a buy for fund managers in recent weeks.
Amazon Stock Jumped 81% In 2023
The stock gained 81% in 2023 and is higher by another 12% this year so far, according to IBD MarketSmith.
On Feb. 1, the company launched a generative AI tool for a "conversational shopping experience" that it calls Rufus. According to the company, Rufus is "trained on Amazon's extensive product catalog (and) customer reviews" and makes recommendations based on the context of the customer's conversation. The plan is to roll out the tool to all customers in coming weeks.
Meanwhile, it also added new features for natural conversation with Alexa, its robotic AI assistant.
In September, Amazon invested $4 billion in Anthropic to equip AWS with AI features. The tech behemoth also has enhanced retail and cloud computing businesses with its recent ventures into AI.
Mutual funds own 39% of outstanding shares of Amazon stock. More funds have been buying shares over the past four quarters. The American Century Focused Dynamic Growth Fund (ACFSX) and the Janus Henderson Forty Fund (JARTX) hold shares of Amazon.
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