AMZN
Amazon's stock has seen substantial volatility over recent years, with a significant drop of 50% in 2022, followed by a robust recovery of 81% in 2023, although it still trails behind the consistent outperformance of the S&P 500 and select high-quality stock portfolios.
Despite the challenging macroeconomic conditions marked by high oil prices and elevated interest rates, Amazon has demonstrated resilience in its financials, with a notable increase in net income to $10.4 billion in Q1 2024 from strong performance across its North American, International, and AWS segments.
Moving forward into 2024, Amazon projects its Q2 sales to range between $144 billion to $149 billion, with an anticipated full-year revenue of approximately $641.4 billion and an improved net income margin leading to a forecasted net income of $43 billion.
Let's delve deeper into Amazon's stock fundamentals and technical analysis to make some short-term price predictions and address the question: "Is AMZN stock a buy?"
Amazon Stock Fundamental Analysis
Amazon's market capitalization stands robust at $1.96 trillion, emphasizing its significant footprint in the market. Despite a Price-to-Earnings (PE) ratio of 52.86, which is high relative to the overall market, the valuation can be justified by Amazon’s growth prospects and dominant market position, especially in sectors like cloud computing and e-commerce.
Recent news has been highly favorable. Amazon's decision to expand its cloud infrastructure in Singapore with an investment of $9 billion suggests aggressive growth plans in the Asian markets. Additionally, the positive turnover in AWS' growth catalyzed by increased margins underscores the company's robust operational efficiency and forward-looking growth trajectory. Further, as evidenced by consumer shifts towards online retail, Amazon continues to benefit from closures of physical stores like those of Sam Ash.
The company's EPS of 3.57, coupled with these growth initiatives, bolsters the case for its long-term earning potential. However, the discounted cash flow (DCF) value at $48.55 notably underestimates the stock's potential based on existing market prices, echoing some concerns about overvaluation in the short term.
AMZN Stock Technical Analysis
| Company | Amazon.com, Inc. (AMZN) |
|---|---|
| Last Close | $188.70 on May 06, 2024 |
| Year High | $189.77 |
| Year High Proximity/Resistance | $189.05 |
| Relative Strength Index (RSI) | 56 |
| 50-day Moving Average | $178.67 |
| 200-day Moving Average | $151.82 |
| MACD | -1.48 (Negative) |
| Support Level | $179 |
| Resistance Level | $189.05 |
| Average True Range (ATR) | 2.62 |
AMZN Long-term Investment Potential
Analysts' ratings present a strong consensus towards 'Buy', with 39 buys and only 3 holds, underlining confidence in Amazon's long-term growth and profitability. While the DCF suggests caution, the aggressive expansion strategies, continuous growth in core areas, and the ability to capitalize on market trends reinforce Amazon's position as a compelling long-term investment despite possible short-term overvaluations.
Overall Evaluation & AMZN Price Predictions
For the next trading day, i.e., May 07, 2024, and the upcoming week, the stock is likely to test its resistance level at $189.05, influenced by positive news flows and robust technicals. If it breaks this level, further upside could be expected, though traders should be cautious of any retracement due to profit-taking.
Based on comprehensive analysis, Amazon.com, Inc. is classified as a 'Buy' candidate. The decision is driven by its strong market position, significant growth opportunities, bullish technical indicators, and favorable analyst consensus. Potential investors should monitor the stock closely for any significant deviations in expected trading patterns, particularly considering its nearing resistance level and ongoing strategic investments.
